ClinPage’s recently spent a while picking the brain of Douglas Peddicord, executive director of the Association of Clinical Research Organizations (ACRO). This former clinical psychologist spent 10 years as a lobbyist for various health care provider groups before delving into the CRO world. In addition to his role at the five-year-old ACRO, he’s vice president of the lobbying firm Washington Health Advocates. Here’s what Peddicord had to say about ACRO and the industry.

Who are ACRO’s members?
There are 10. They are Kendle International, Covance, Parexel International, Pharmaceutical Product Development (PPD), Quintiles Transnational, PRA International, United BioSource (UBC), Medifacts International, PharmaNet Development Group, and MDS 

How many CROs out there?
Who knows? Depending on what numbers you look at, there might be 600 to 800, or 1,000 to 1,500 worldwide. That said, our 10 member companies constitute about 65 to 70 percent of industry revenues.

Is revenue going to grow faster or slower for CROs in 2007?
Among ACRO membership, revenue has been growing at around 17 percent annually. I would expect it to continue to grow at similar rates. Interestingly, spending by sponsors—pharma and biotech—has been going up at a rate of 10 to 11 percent annually. Meanwhile, their spending on clinical outsourcing services has been going up at a rate of 14 to 17 percent over the same period. So, sponsors are continuing to grow their investment in R&D but the amount of money they’re spending on outsourcing is growing even faster.

Is technology adoption in pharma hurting CROs, because their services will not be as urgently needed? Or helping, because the pressure on sponsors means that more and more trials will have to be outsourced?
On the whole, helping. Technology has been the promise for improving the speed and efficiency of clinical trials processes for a number of years. We are now beginning to see that promise coming closer to fulfillment. I think what we will see is that CROs and all the players will be more and more concerned with the speed, accuracy, and efficiency of the process and less concerned with: what’s the technology I’m using?

Which types of CROs are doing especially well?
The broad trend is that sponsors have a couple of—at this point—models for outsourcing. Companies are looking to be able to work with any and all of those models.

First, there has always been tactical outsourcing, which is a way to expand capacity and in part, get away from the fact that drug development, by its nature, is an expand-and-contract process. Without the ability to outsource, sponsors would have to grow and shrink drug development personnel depending on what’s in the pipeline.

The second type we see is outsourcing by task, typically called functional outsourcing or business-process outsourcing. A couple of CROs have made large investments in a piece of the drug-development process, like data management or IT or biostatistics.

The third model we see now is strategic outsourcing. Many of the ACRO members are involved in this. The sponsor and CRO form a strategic partnership in which the CRO may take over any or all of the clinical development processes, and the sponsor will outsource everything that it doesn’t see as a core business process for itself. Big pharma isn’t using this model as much.

Differing CROs have adapted themselves into one of these three. Large pharma companies can pick and choose across those three models. As for small biotechs, it’s much more likely that they will, unless they are planning to build a large infrastructure, send more [business] to that third model. Five years from now, if we presume that new drug development will be coming out of those smaller pharma or smaller biotech companies, then I think we may see that CROs that have a greater capacity to provide a full range of services will be getting more business.

How important will post-approval, or Phase IV, studies become? Will Congress have to do something, or is the industry being proactive?
There’s a variety of legislation out there that aims to give the FDA greater authority and to encourage the agency to set up more specific kinds of post-approval requests. That may mean some increase in the number of Phase IV trials. But also, the FDA is looking at a variety of other ways to get hold of large-scale population data on newly introduced drugs. The agency is looking for more efficient ways to capture safety data than it has now. Certainly Phase IV trials are a way. The agency is being more cautious at the approval stage, but I’ve not seen a lot of change. I think sponsors are very much aware of concerns around safety, given the recent withdrawal of Zelnorm, for instance. 

Internationally, where is the use of the CRO growing the fastest?
At least across our membership, we’re seeing an increase in operations in India, China and South America. There have always been significant operations in Europe, though now they’re shifting somewhat eastward into emerging markets.

Which areas of the world are seen as the most promising places to locate trials?
Differing reasons in differing spaces. The limiting factors for clinical trials often are the inability to recruit participants and patients, and the inability to recruit clinical investigators and investigative sites. In countries where there are lots of people, from a clinical perspective, the population is less tapped—there have been fewer trials run in the country. In the U.S., there may be 50,000 trials going on at any one time; in some of these other countries, there may be a couple hundred. Similar logic applies to investigative sites and physicians.

Are data standards looming larger, becoming more important, at CROs?
Standardization has been a problem. But what’s happening now in the space are increased efforts to develop standards. Whether we’re talking about imaging or clinical trial data standards, standard-setting groups have been working hard on developing standards. We’ve been doing a lot of work with CDISC, which has gotten very broad stakeholder involvement from CROs and academic medicine, and has made huge strides.

What do you make of partnerships between CROs and major technology firms like Phase Forward and Medidata? Are these alliances mutually beneficial? Or could they present problems for CROs in the future if the clients develop warm ties with the software companies—and not the CRO?
We’re seeing more and more effort toward collaboration among sponsors, CROs and technology companies, and that’s ultimately to the benefit of all the parties. For instance, pharma and the FDA have put together the biomarkers consortium, aimed at the development of biomarkers that can be accepted by the agency as surrogates for clinical findings. Rather than a single company developing biomarkers for trials it will run, it’s a group of those companies that will mutually develop and agree on biomarkers. Ultimately, they all benefit and they don’t all spend time developing a measure the agency will accept. I’m aware of a half dozen companies doing this. In the CRO world, it might soon be the same thing or something similar.