Recruiting and Pricing in Clinical Trials: Small CROs vs. Big Pharma

Despite the trend of big CROs’ merging, growing even bigger and grabbing the greater share of clinical studies market, small medical research organizations manage to survive side by side with those giants. This is possible due to the fact that those giants demonstrate little interest in catering to small and middle-sided pharma needs, thus making them ideal clients for smaller clinical research organizations.


Recruiting Nuances in Big and Small CROs

Recruiting is definitely an area where small-to-mid-sized medical research companies face certain challenges. Today, patients can choose which clinical study to participate in, and whether to do it for a big and well-known or a smaller and less-known company. Obviously, this choice is widely impacted by given companies’ reputation – most patients naturally will opt for getting enrolled with the company name they recognize.

Information about medical research organizations is delivered to patients via social media and internet, and these channels play significant role in the choice those patients make. Hence, the only way smaller CROs can compete with big ones in the industry is through building reliable reputation. They should be able to assert potential patients that the latter will be taken good care of by high-class professionals.

As long as there is experimental medical research, recruiting is going to be a major challenge. And the need for patients will only grow in this industry – in U.S. alone there are about 5,000 trials being conducted at any given time. What this means for smaller medical research companies is that they need to invest more resources and time into patient recruiting through building a sound reputation so that patients know all about who the company is and why they are doing any concrete trial.

However, in certain areas – infertility treatment or in vitro fertilization (IVF) for one – clinical trials become the only option for many patients who otherwise cannot afford the payment of say $20,000 for the procedure. In cases like those, patients are likely to care less for a particular CROChances are they will follow their physicians’ recommendations when choosing an experimental research to get enlisted in.


High Costs and Qualified Staff: What They Mean for Small and Big Companies

Every clinical research organization– big or small – has to deal with significant rise in per patient cost of medical researchwhich grew from $2,000 in 1996 to the current $10,000. While the entire industry is impacted by these costs, they are easier to deal with for large pharma than for smaller CROs.

However, high per-patient clinical trial cost is not the only difficulty smaller research organizations have to face. Their other most common pains are resources, staffing and experience. At present, turnover in the industry is quite significant, and again it is big pharma who benefits from it the most. 

Small medical research organizations rarely can get an experienced and qualified staff member, and even if they do, the person most certainly moves to another company in two or three years, or gets promoted to a higher position within the same company. So, these specialists don’t stay long enough to develop the required skill set. The truth is, qualified and experienced staff of small companies is an inevitable object of headhunting by larger and better known organizations.


Controversies in Pricing of Clinical Research

Costs for experimental research that can last up to 2 years will hardly remain fixed. On the one hand, this is rather frustrating, but on the other, with medical trials growing more and more complex throughout the industry, there is no choice but to make changes to pricing lest the study runs the risk of disruption.

However, the way companies handle pricing is in desperate need of overhaul. While a lot of large clinical research organizations stick to variable pricing model, some representatives of the industry suggest all adjustment to be made at the beginning of the trial so that the price remains fixed throughout the research. To maintain this condition, there should be penalties both for CROs – if they change staff – and pharma companies – if they make changes to their protocols, which increase costs of the study and delay it.


How CROs Should Deal with Protocol Changes?

The best way to deal with changes is to anticipate them. Based on their experience, clinical research organizations know that there are going to be 3–4 protocol amendments once they start out a study. These amendments can be incorporated into pricing model from the very beginning.

For instance, clients as a rule increase the initial number of patients in clinical trials. If the client adds up to 20 patients, this change can be anticipated and reflected in the initial price with no need of its further adjustment. However it should be agreed ahead of time with the client and spelled out in the contract, how to deal with cases when they need to add about 100 patients.


Balancing Risk and Reward of the Parties

Some pharma clients do not like the above mentioned approach. Their argument is why they should pay, say, for 4 protocol amendments if at the beginning they anticipate only 1. A sound answer to this objection would be that statistically a study has up to 4 amendments. If the client pays this fixed price, in case they need up to 6 amendments, they still will pay just for 4, with no changes in price. Yet, in case of having only 2 amendments, they will get no price reduction. This principle allows to balance reward and risk for both parties.

This approach is more applicable for smaller CROs since large ones work with a resource/hourly based model and have investors to be considered with. Whereas for smaller clinical research organizations this model may work just fine: loss of money is minimal and clients get used to the idea that extra changes need to be paid for. Of course, not all clients appreciate this approach to fixed billing system. But those who do – about half of them and mostly smaller clients – realize all advantages of this fixed-price approach.

And, of course, it should be a two-way street, meaning that clinical research organizations also should be subject to penalties if they change the pricing and/or replace the team. Of course, personnel change is very hard to prevent. But why should a client be charged for the contractor’s inability to keep its staff happy and motivated to stay with its company? And why should any pharma company want to work with an organization that can change staff at any time during a study and face no penalties for doing so?

All these conditions should be clearly spelled out in the contract in order for the CRO–pharma company partnership to work the best for both parties.