Why Some Sponsors are Considering Dedicated Resource Agreements

Many sponsor-CRO relationships are based upon one or more transactional agreements that are each focused on a specific project. Projects are offered by the sponsor and are generally bid upon by a number of different CROs. Once a project is awarded to a particular CRO, then that organization becomes responsible for the logistics, such as setting up the facility, making technology decisions, assigning staff, organizing the work flow, and ensuring compliance with appropriate regulatory guidelines. When the project is completed, the relationship between the sponsor and CRO ends, at least until the cycle of offering, bidding, and awarding has been repeated with a different project.

While this type of arrangement works very well for some sponsors, particularly those with small, well-defined projects, other sponsors find the transactional agreement presents challenges.

Transactional Relationships Can Present Challenges

Transactional arrangements tend to be very rigid. For instance, in order to make any program priority changes midstream, the contractual process on both sides must be revisited, with its accompanying cumbersome paperwork. A longer cycle time is almost guaranteed when any changes need to be made with this sort of arrangement in place. Second, transactional relationships are often plagued by inconsistent data quality and poor communication. For this reason, it is not uncommon for a pharmaceutical company to become frustrated and to contract with one CRO after another in an effort to assure high-quality, consistent data, smooth communication, and fast turnaround time.

Dedicated Resource Agreements: A Good Alternative

Although transactional agreements can be the right fit for certain types of projects, many sponsors could be better served with a more flexible, integrated service agreement, such as a Dedicated Resource Agreement. Dedicated Resource Agreements allow a CRO to serve as an extension of the sponsor’s own team, instead of functioning as a separate entity. This is possible because all of the resources in a sponsor’s Dedicated Resource Agreement program are not shared but rather are sponsor-dedicated.

The benefits of a Dedicated Resource Agreement program are numerous. First, Dedicated Resource Agreement sponsors experience improved cycle time and a higher degree of flexibility. Because of the simplified approach to project management, contracts between CRO and sponsor are limited to one overall agreement, so there is a significantly reduced administrative burden. There is no need to provide separate quotes for internal authorization and PO issuance for new method transfers, validations, or changes in sample volume, saving an enormous amount of time for both operational and business representatives. This translates into improved cycle time for the sponsor’s products and reduced outsourcing costs for the sponsor.

The simplified approach also means that the sponsor has a high degree of flexibility. A Dedicated Resource Agreement does not require the issuance of work scope changes when priorities change, allowing the study team to continue on with their work versus waiting for approval. Again, workflow improves and cycle time is reduced. Yet, even with a simplified approach to project management, Dedicated Resource Agreements are designed to help the sponsor easily partition costs into its own various budgets.

Another major benefit of a Dedicated Resource Agreement is that it makes the most efficient use of the sponsor’s financial resources. For instance, the integrated service package that Covance offers can save the typical Dedicated Resource Agreement sponsor over 10% in external CRO costs compared with a similar set of projects awarded through standard transactional agreements. These savings accrue through full-service sample management and reduced shipping fees, and improved data quality and efficiencies in sample analysis production. Additional in-house savings are also realized under the Dedicated Resource Agreement program through a large-scale reduction in paperwork and administrative duties as well as from improved cycle time. These internal savings can add up to an additional 10%. Not only does the Dedicated Resource Agreement program provide reductions in external and internal costs, it also reduces the sponsor’s operating leverage.

Covance Bioanalytical’s Dedicated Resource Agreement Program

Covance Bioanalytical created a Dedicated Resource Agreement program in order to provide sponsors with more flexibility and options to fulfill their drug development service needs. The Dedicated Resource Agreement program at Covance is an integrated allocation and project management program designed to support early to late stage development projects that are or have the potential to be large in scope, have frequently changing priorities, or require dedicated scientists to ensure consistency of results over the long term. It provides sponsors with a dedicated principal investigator and a dedicated team of full-time employees in designated facilities. In effect, the sponsor-dedicated team at Covance becomes an extension of the client’s own laboratory, instead as functioning as a separate entity.

Here’s a quick snapshot of some benefits a sponsor experienced after entering into a Dedicated Resource Agreement with Covance:

• Total cost savings of 15%
• Increased cultural bond between sponsor and Covance
• Leveraged flexibility with control over FTEs priority allocated

You can read the full case study here.

Joseph Bower, Ph.D., MBA, is an Executive Director for Immunochemistry at Covance. With over 13 years industry experience, Joseph has previously served as global manager for Global Clinical Immunology/Immunochemistry at a major pharmaceutical organization. Joseph received both his Ph.D. in Biochemistry and an MBA from East Carolina University School of Medicine. Joseph has been published in numerous peer-reviewed journals.