Health Decisions creates ‘fixed-price trial’ model to incentivize CRO performance and speed timelines
Since CROs began conducting trials for drug sponsors, there has been a lot of quibbling about cost. CROs claim to do the work more quickly, efficiently and inexpensively. But many sponsors have had the opposite experience, saying CROs don’t accomplish recruitment goals and keep extending the trial timelines to do so, adding to the sponsor’s costs. Some claim not all of the data is collected properly, taking months to then clean the data, for which sponsors are charged.
“The model in place today is typically a time and materials model for running a clinical trial,” said John Worden, director of strategic development for CRO Health Decisions. “The CRO is paid for the man hours it works on a study, and the more years the study lasts, the more money the CRO will receive. The questions is: how does this incentivize a CRO to perform better? We think it’s a broken model.”
Now, Health Decisions has created and is launching the “fixed-price trial.” It works like this: Health Decisions and the sponsor sit down and hammer out parameters for the execution of the study, with the CRO committing to handle the trial for a fixed amount, which, says Worden, automatically builds in a 30% cost savings for sponsors, since most CROs take trials over budget by 30%.
Then, he said, Health Decisions staff try to complete the trial early, if possible. “The faster we can complete it, the more profit margin we can generate,” freeing up staff to move on to other projects, he said. At the same time, Health Decisions commits to agreed-upon performance metrics, so the sponsor can be assured the CRO is not just rushing the trial through, but is doing a great job.
The concept can work one of three ways: 1) the sponsor can agree to pay bonuses for every month the CRO comes in ahead of goal while adhering to quality standards; 2) the sponsor can pay the CRO a percentage of sales of the drug once it hits the market; or 3) the sponsor can offer a percentage of equity in the company.
“People are realizing that, wow, if you do finish early, you create much more value,” said Worden. “And we ask, how much of that are you willing to share with us?”
And if Health Decisions is late? “That eats into our profit, our performance bonuses,” he said. “This model has us motivated by speed.”
Health Decisions, said Worden, is technology-focused and and also committed to using adaptive trials, in which a trial can be altered or tweaked in real time if a particular part of it isn’t working. Technology-focused adaptive trials enable the CRO to be very agile when working on trials, allowing it to move away from the time and materials model, he said.
Health Decisions is working on one such trial, which has been underway for six months. Fearing recruitment delays, Joe Pike, CEO of Evofem, decided to go with the concept for his company’s phase III vaginal contraceptive trial.
“If you’re working on a drug to treat MS or diabetes, you have motivated patients who are anxious to see if your drug works,” said Pike. “Our trial is a vaginal contraceptive trial. The FDA won’t allow you to give incentives to patients. A woman has to come in once a month to be examined and it’s just not an easy study to recruit for.”
On top of that, the trial’s cost had already expanded beyond what Pike expected. When the company first started planning, it had budgeted the trial at $15 million to $20 million. “But by the time we got all clearances from the FDA, it looked like it would be $40 million,” he said. “And in this field, if you’re not careful, that can jump to $80 million, particularly if you’re a neophyte when it comes to clinical trials and are at the mercy of what you’re told.”
To protect the company and its shareholders, Pike opted for the fixed-cost trial and the option to give a portion of the drug’s proceeds to Health Decisions, if the CRO does everything it promises.
Health Decisions plans to recruit 2,800 patients for Evofem’s trial, using 60 sites spread across about eight countries. Evofem is involving Health Decisions in design, regulatory and strategic elements of the trial, which has an estimated primary completion date of October 2013.
Health Decisions typically works with small to medium biotech and pharma, but it is discussing the concept with larger pharma companies. The sweet spot for the fixed-price trial concept, said Worden, is the development of drugs that need to get to market quickly because competitors are close with similar drugs.
What about the unexpected—if a sponsor suddenly loses funding, for example? Then all bets are off, said Worden. “There are some exceptions to our fixed-price model; there are some things we can’t control.”
The company is poised to announce the launch of a second fixed-price trial in the coming weeks.