An additional external factor effecting outsourcing groups is currency exchange rates. Choosing the currency in which payments are made to suppliers has become increasingly complex for companies conducting studies on a global basis. In cases where both the sponsor and provider incur costs to support their infrastructure in various countries, establishing fair and equitable payment terms is challenging. Further, given the significant fluctuation in the value of the U.S. dollar vs. the euro and pound, it is difficult to establish precise payment terms that do not impose unnecessary risk associated with currency exchange rates for either party. Many companies establish exchange rate corridors on the effective date of the Agreement that can be adjusted prospectively based on a mutually agreeable formula.

However, despite the inclusion of such provisions in contracts, the risk associated with currency fluctuations is an ongoing concern for both sponsors and providers. As both sponsors and providers expand into emerging markets such as Asia and India, this issue will become increasingly complex. Beyond the currency challenge, companies must learn the unique business cultures of the markets they serve. In some organizations, subsidiaries are allowed to contract with providers outside the Agreements that govern the relationship with the provider in other parts of the world. It is important for providers to fully understand and track the various Agreements they have with all the entities related to a particular customer. It is equally important for the sponsor to share this information with all affected providers to avoid confusion and lack of alignment.

Newer entrants

One service area that is facing increased visibility is central imaging. Historically, imaging necessary for a clinical trial was provided by the investigator physicians in clinics and hospitals—particularly in the university setting. The need for better coordination of this service across multiple sites has prompted many companies to engage a core imaging lab to manage this aspect of a study.

Over the last 10 years, several commercial organizations have developed the scale to support global trials with consistent methods of analyzing imaging endpoints. The increased focus on diseases such as cancer, osteoporosis, and Alzheimer's, where imaging is an important marker of efficacy, is driving growth in this industry. This subjects imaging providers to the same selection and contracting processes that have traditionally applied to others.

One of the potential risks in the current environment is that new entrants into the market will use price as their primary differentiator, thereby creating a quality vs. cost dilemma for existing providers with a proven track record of strong performance. While no one in the industry would knowingly compromise quality for low prices, the potential does exist for the decision-making process to become overly focused on the latter. It is important that these and other vital services remain available and that the companies that perform them remain viable by not succumbing to the pressure to commoditize their services by offering unsustainable pricing.

Navigating RFPs and RFIs

Similar to MSAs, Requests for Proposal (RFPs) and Requests for Information (RFIs) are more comprehensive and address a broader array of issues. A recent RFI issued by a large global pharmaceutical company included a series of questions about potential providers' policies regarding the use of minority owned subcontractors, employment nondiscrimination, and environmental responsibility.

Increasingly, companies require their suppliers to provide detailed, nonconfidential information regarding their experience with other sponsors. This attempt to establish a providers' credibility extends beyond traditional reference checks that invariably provide little objective information. While responses to these requests do not typically constitute a formal, binding offer, the sponsor's expectation is that any final agreement for the services described will be consistent with the proposal and not require material changes, amendments or change orders once the contract is executed.

In an effort to avoid as many unexpected issues as possible, some sponsors' RFPs can span several hundred pages and include inquiries about issues as diverse as whether or not a provider intends to initiate an acquisition or use off-shore resources to provide any of its services. There is no tolerance for ambiguity in providers' responses, as evidenced by the use of scoring systems to compare multiple bids.