Ever try to do more with less? Or create an independent view of a situation when you are stuck in the middle of it? All while trying to manage costs, reduce time to market and operate in a cash-constrained environment?
Well, turns out there are apps for that. Not the kind you find on your iPad, but the kind that’s brought to you by what used to be called a consulting firm. That app is outsourcing.
Outsourcing is an old trend with an old name and new use, especially as it pertains to the healthcare industry. To go with this evolution are new practices and realities. Outsourcing is a means by which a firm uses outside expertise in lieu of in-house personnel to complete a task. In the healthcare products universe, the most common types of outsourcing are the management of clinical trials and manufacturing. Firms don’t always have, or want to have, these types of skills on the payroll and prefer to have them reside elsewhere.
Regulation issue
However, a new area of outsourcing has appeared, one that’s extremely critical to a product’s success and one that has traditionally been done in-house: regulatory affairs. For certain companies, regulatory affairs—the entire function, not just discrete projects—can and should be outsourced. There can be an in-house coordinator, but overall, the work should be done by outside experts working in a coordinated, managed fashion.
Well-managed regulatory efforts have a huge impact on the success of a product and the firm. In small firms, especially, these efforts often run parallel to and in conjunction with traditional drug development. Too often the small firm does not have the resources or expertise to complete all of the efforts in-house and, as a result, they use a number of consultants to help complete the needed tasks. However, because these consultants are outside the company, their full expertise, especially as it applies to drug development, the types of trials, etc., is rarely fully utilized. Drug firms often spend time and money they can ill afford because the right steps are not taken.
This has been the model for years. One or two in-house team members manage numerous consultants responsible for chemistry manufacturing and controls, clinical matters, toxicology and related concerns. For years, we have accepted the inherent problems with this model.
Under the traditional model, there is frequently a lack of coherence between the various outside consultants. This manifests itself in team meetings, if they occur; written submissions to the various regulatory agencies, where different writing styles are always apparent; and in the advice provided to others in the drug development process. Consultants are typically given a specific task, which may not be in congruence with the entire program, and most just play the hand they are dealt. They don’t figure out how to integrate what they do into the entire drug development program. So, the client is short-changed and the product, the patient and the shareholders suffer as a result.
A different path
Increasingly, small- and medium-sized firms are seeking a better way. As venture money gets a little tighter and the need for speed increases exponentially, the pain of failed drug development or regulatory delay is acute and can lead to chronic issues. Getting things right the first time is increasingly required. The pain associated with making a mistake or even picking the wrong path can have disastrous impacts in terms of both time and money. All too frequently, management is turned over because of drug development mistakes that could have been prevented with the right approach.
These small- and medium-sized pharmaceutical or medical device firms are starting to outsource all of their regulatory functions and are integrating the outsourcing firms into their corporate structure as members of the internal team. Work that was previously conducted by a group of independent consultants each serving different functions is now being conducted by one firm. The internal project managers now spend more time getting work done and less time managing the various consultants.
Over the past few years, we have observed a rise in the number of regulatory firms with the internal talent necessary to provide all of the skill sets, and this has caused a transformation in the way advice is provided as well as the economics of the relationship.
Doing it right
When done correctly, the pharma firm engages a regulatory firm specializing in providing the various services needed to achieve the milestones necessary to succeed in drug development. It is a misnomer to say that the job of the regulatory consultant should be limited to regulatory matters. The point of outsourcing is to get the best advice possible and then to use that to move the product’s development forward.
A key first step in the process is for the regulatory experts to help the pharma/medical device firms refine their strategy. Through strategy development, the outsourcing partner is able to learn all issues at hand, and can then figure out how to achieve the firm’s goals and provide value through the process. The regulatory strategy will also help the outsourcing firm to see where different steps can be taken to streamline the process. Despite the genius on the drug development side, without a firm regulatory pathway, that genius may be wasted.
A good regulatory outsourcer will provide drug development advice that complements the regulatory state. By using a firm devoted to outsourced services, the client gets a team of individuals whose skills complement each other. There is a project manager responsible for the firm’s overall conduct, which relieves the client’s project manager from many administrative duties.
Finally, the economics will also change. Traditionally, consulting firms are disliked and are regarded as “black holes” by their clients. Clients feel that they have no control over actual costs, and monthly invoices seem random in construction. This has caused consternation and frustration over the years and has led some clients to shy away from using experts, despite the need to do so.
To make outsourcing work, billing should be fixed-price. If the point of outsourcing is to provide the client with the same benefit as if the employees are in-house, then the budget amount should be known and fixed. When a function is in-house, it typically has a budget. The same should be true for the outsourcing partner. When the assignment begins, the outsourcing partner should define the range of activities within its scope and from this, a monthly fixed budget is developed. This allows two things to occur: 1) the client has budget certainty and 2) the outsourcing provider can do whatever is necessary to get the job done, without having to worry about each corresponding hour.
The developmental firm should really try to focus on what it does best. To do this, the scientific minds and the business developers should utilize the services of the outside regulatory expert to their full potential. Though new to the marketplace, this new model provides budget clarity as well as high-value advice and counsel. As a result, the time to market and the cost of getting there is lessened. CEOs would be smart to consider this option.
Matthew Weinberg is CEO at The Weinberg Group, a global player in regulatory and compliance services. He is responsible for oversight of all client efforts, as well as the firm’s strategic growth. His client efforts focus on providing strategic and operational assistance to technically oriented entities in areas such as research and development, regulatory affairs and quality assurance. Weinberg’s assignments have included strategic development of new products, testimony on the management and economics of scientific enterprises, contract issues, and product development. He holds a bachelor of science in administration and management science with a double major in economics and a master of science in industrial administration, both from Carnegie-Mellon University. For more information on The Weinberg Group, please visit www.weinberggroup.com.
