Common Pet Peeves in the Sponsor-CRO Relationship

19th May 2016 (Last Updated July 18th, 2018 10:39)

Henry Kerali assesses real-life case studies where Sponsors and CROs butted heads

Common Pet Peeves in the Sponsor-CRO Relationship

Over the course of a clinical trial, a multitude of obstacles can present themselves testing the resolves of both the sponsor and the CRO. Everything from patients dropping out to change orders can impact the progress of a trial. Some factors, however, are unavoidable and nothing can be done. But when a situation develops that could have been avoided, more must be done to ensure it doesn't happen again. This article will examine two real-life case studies when sponsors and CROs clashed almost to the detriment of the trial.

Situation 1

In this first instance, here you have a service provider who contacts the Sponsor's Clinical Trial Manager (CTM) to inform them of an unpaid invoice. And the fee is substantial. After doing some research, the CTM uncovers the reason for the delay, namely, the invoiced work was almost entirely out-of-scope. Subsequently, the CTM questioned whether the amount of work performed by the Provider was essential to the trial, before emphasising the Sponsor's policy of not paying for non-contracted work. The Provider then reiterates their sadness over not being paid for what they deemed legitimate work.

Sponsor's perspective: "The provider not only did work out-of-scope, they're now demanding a rush payment. What money-hungry cons!"

Service Provider's perspective: "We went out of our way to perform urgent work that the sponsor specifically requested, and now they're refusing to pay. What overbearing cheapskates!"

Analysis - As it turns out, the CTM in question was new in the job and their predecessor regularly requested out-of-scope work to avoid study delays. Additionally, the previous CTM had promised approvals would be forthcoming, and as a result, the Provider performed the work in good faith. What's more, the CTM at the time had already begun the process of getting approvals. However, out-of-scope means longer approval process. Even the transition between CTMs led to additional delays.

Solution - A conference was swiftly held between the Sponsor and the Provider to ameliorate tensions. The Provider agreed to hand over substantial backup documents in an effort to assist the Sponsor in obtaining internal approval. Meanwhile, the Sponsor agreed to expedite approval and payment. Both agreed to avoid out-of-scope work in the future, when possible. However, if urgent work was required, both agreed to interim "pre-contract" work-scope documentation.

Situation 2

In the second case study, the Service Provider and the Sponsor entered into a fixed contract. The contract, in which the budget was fixed based, paved the way for greater provider efficiency, more provider profit, in theory, enabling the sponsor to have a stable budget. On paper, it was the ideal contract. However, over the course of the study, additional site monitoring and data management work were required, and as a result, there was significant disagreement over the incremental budget increase.

Sponsor's perspective: "We entered into a fixed contract for a reason! Because they're less efficient than previously thought, they now want more money."

Service Provider's perspective: "They're asking for significantly more work than the original scope. It's only fair that they pay for it."

Analysis - On the increased data management work, the scope provided in the contract did not account the work that was carried out. Due to the small size of the scope, the Provider had planned to absorb the cost. However, more monitoring was required which cost significantly more than the additional data management work. With a change in scope, the sponsor and the service provider agreed on a change order. When the change order proposal arrived, however, it contained both the increased Monitoring as well as the previous DM increase, which the CRO viewed as fair. Nevertheless, the sponsor was surprised by the DM increase.

Solution - After explanations and negotiation, the sponsor agreed to expedite approval and payment for the monitoring increase. The provider, on the other hand, agreed to absorb the DM increase as originally planned. The necessary contract language was added to the MSA (Master Services Agreement) which would expedite the potential scope increases in the future. Furthermore, the sponsor also provided a more substantive explanation of "fixed contracts" to upper management to clarify the exact scope of the contract.

ADDRESS!

When reflecting on these case studies, what's evident is an apparent distrust between sponsors and CROs. Certainly, it can be argued there's an initial tendency for sponsors and vendors to assume the worst intentions, and that's due to a number of reasons. Firstly, more often than not, there's a lack of clarity over the contract scope leading to misunderstandings and breakdowns in communication. What's more, there's a failure on the part of both parties to truly understand each other's company processes. But crucially, there's a fundamental lack of communication over the requirements and expectations between the two parties and within the parties themselves.

So what can be done to remedy common flaws found within the sponsor-CRO dynamic? Consider ADDRESS, an acronym coined by R&D Finance expert, Chris Chan of FibroGen, which seeks to improve the sponsor-CRO relationship. It's a simple formula that every sponsor and vendor should consider and abide by:

- Assume the partner is operating in good faith (until demonstrated otherwise)
- Define and establish clear job expectations
- Define and clarify your contractual expectations
- Refrain from inter-partner negotiations/discussions until intra-partner consensus is assured
- Email summary follow-up to verbal discussions
- Surprises = Small. Keep other partner consistently and promptly informed on "out of scope" activities.
- Specific contracts/work orders - Spell out as many details as feasible

*Source: Chris Chan, Senior Director, R&D Finance, FibroGen

 

While it's rare a trial is conducted without the sponsor and CRO butting heads, adopting simple processes where all stakeholders are transparent with one another will go a long way to ensuring the study proceeds with minor delays. Remember the ultimate endgame - getting a product into the market that could save millions of lives.

 

References

Chris Chan, Senior Director, R&D Finance, FibroGen - Like Mars & Venus...Only Worse: Exploration of Common Peeves in the Sponsor/Service Provider Relationship (Presentation)