CRO Management 101

I have a couple of friends who run small startup biotechs. They’re seriously considering doing their work in India, primarily because of lower costs, and asked me for some advice. I have accumulated quite a bit of expertise in doing trials in India, but since both of them are clinical trial novices, I put together some general CRO 101 advice for them. Here it is:

1) Hiring a CRO to do a study is very similar to hiring a contractor to build you a house. You have to be very specific in what you want, you should make sure you will have to change as little as possible, and you must have very clear communication with the CRO throughout the study. Just as you have to specify the exact make and model of the shower head you want, you need to be very specific in what you want from a study.

You can’t just sign a check and expect the CRO to deliver what you want. I guarantee that if you do that they will not deliver. They are not mind readers. And they don’t always have their economic incentives aligned with yours.

2) For some CROs, much of their profit margin comes from change orders, just as with the guy building your custom house. In the quote, they might quote you $1000 for a planned monitoring visit, but additional monitoring visits not specified in the agreement might be double that rate or more. In some instances, this is not the fault of the CRO, because if they have to apply resources they hadn’t planned for, it can cost them a lot more. But in some cases, CROs may know that the RFP is not well written and there will have to be change orders, and therefore may bid with the knowledge their profit margin will come from the change orders. This is particularly true in the case of small inexperienced biotech customers that might not know what it’s doing and is bound to need changes.

The way to avoid this is to not have change orders, and the way to avoid that is to write the protocol and the RFP well. This is not always easy. The alternative is the have a strict change order process and rates built into the contract. The construction of a well written CRO contract is a specialized skill, and I recommend using a CRO contract writing specialist unless you know exactly what you’re doing.

3) It is best, usually, to set up a contract as an earned value contract rather than an hourly contract. Most CRO contracts used to be written so that the sponsors would get charged by the number of hours it took the CRO to do the work. Longer it took them, higher the cost. Now, it is common to get charged per task. For example, a flat rate per monitoring visit. The best type of contract is per deliverable. For example, a fixed amount to enroll certain percentage of patients. As a small biotech, I think it will be hard to get a fixed cost contract, but the India CRO market is oversaturated right now so you may be able to.

4) The CRO you pick is less important than the specific team you get, and the team you get is less important than your in-house CRA who will be overseeing them. I would pay what you need to get the very best clin ops person you can find. It will double your costs to oversee the CRO properly, but if you do it right you will still save 50% – 75% off what it would cost you to do the work in the West. I recommend hiring a local CRO and hiring 1-2 people to fly back and forth than going through an international CRO for the reason #5 below. The best would be to hire someone in India to oversee the CRO but that is easier said than done. I know a couple of people I can recommend if you want to go that route.

An alternative is to hire a second CRO that specializes in overseeing other CROs. There are a couple of good ones, but that is going to drive the costs up a bit.

5) Since you’re small, I would not recommend hiring a large international CRO. You will not get their A team – those go to Merck and Pfizer. You might get lucky and get a good team but that is not my experience. I would go with a small CRO that matches your size, and partner with them closely.