Mike Lange, a senior manager at ClearTrial, is not a board-certified oncologist. But he is breezing through a demonstration of the Chicago company’s software. There is a faux oncology trial on Lange’s screen, and he sets himself the task of finishing a few months early. The software produces rapid, highly detailed clinical trial budgets and time lines.

Add a country? Hungary, Argentina? No problem. The boss prefers a medium-sized contract research organization (CRO)? Temperature-controlled shipping of drug supplies? Done.

There is a mix of several CROs, all with different contractual terms? The medical writing will now be handled in-house? Presto, a screen allows new numbers to be added or removed in a few keystrokes. A revised budget appears. Lange is not cutting capriciously. The software has clinical intelligence that guides every decision, channeling every budget, every time line toward achievable, feasible parameters.

Built-in Feasibility

Now Lange types in a few plausible patient recruitment milestones. The software immediately displays an error message: “It is unlikely that any sites will be approved by that date,” it reads. “The earliest possible date (based on the first site approved) for the first subject enrolled is 1/27/11.” A few minutes later, despite being confined to valid assumptions, Lange has sliced 10 percent off the budget.

"The software contains blended CRO rates and labor rates for over 80 countries," says Lange. "The embedded industry intelligence on the costs has been proven. We're generally within one to five percent of actual costs, which is almost unheard of in the industry."

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Other sponsors, of course, still plan trials with Microsoft Excel. There is an ease or tolerance for imprecision that is incongruous in an industry that quantifies everything else. This can get rather existential.

If a time line doesn’t come close to predicting when a trial will begin and end, is it a schedule? If a spreadsheet omits 30 percent of what a project will cost, is it a budget? Do the words have meaning?

Every global, sophisticated clinical development organization knows that trial schedules tend to slip. Big budgets become 30 percent larger after change orders from contract research organizations (CROs) are added to the tab. A delay is “to be expected.” A financial blowout “happens.” Such events are common.

The industry’s favorite scapegoat for clinical development delays and cost overruns is the eternal quest to find patients. Almost any problem can be traced to (or just blamed on) recruitment difficulties. This is like a large global airline not availing itself of Doppler radar and satellite images to anticipate weather.

Excel’s Inadequacy

The roots of the inaccuracy are not secret. Unrealistic recruitment or time line expectations may be tossed down from the C-suite to middle level managers. CROs may submit wildly optimistic projections to win the project. An Excel spreadsheet from a similar project is dusted off without a thorough assessment of how similar the two projects really are.

Some senior managers are in such lofty perches in pharma that they have little insight into the tiny details of whether a trial will finish on time. They have no choice but to accept internally generated or external guesses of a trial’s cost and duration. Wall Street analysts obsessed with FDA dockets never get around to punishing companies for consistently missing the mark.

After a trial gets under way, and a delay or cost overrun is unavoidable, there is somber nodding at the upper levels of the sponsor. Consternation. But no punishment of an industry-wide tendency.

Granular Data

ClearTrial has a different view of how the clinical enterprise could be optimized. The innovation was calculating costs in a more precise manner that is already commonly used by many other industries.

That method, activity-based costing, does not blindly apply the costs of a previous project to a new one. Rather, activity-based costing uses math based on a database of granular trial costing facts. A highly tailored estimate of the project’s cost and duration is created from the ground up. It becomes easy to see the dollar and time consequences of bad weather.

Given that outsourcing is a crucial part of today’s research environment, the software includes multiple ways to account for the considerable internal and external personnel costs. And for the nuances of 150 clinical trial cost elements.

Recruitment Precision

While the software itself doesn’t have patient recruitment expertise, it does force trial planners to use realistic, validated assumptions. ClearTrial won’t allow the user to predict that half of all patients will be enrolled in the first month. Or if a particular Asian country has a 240-day regulatory delay, the program won’t let you place a fifth of your sites there and finish the project in 243 days.

Yes, it’s just math. But it’s based on myriad interdependent variables and sub-formulas that no single human, no single spreadsheet, can easily keep track of.

ClearTrial’s algorithms do sum everything up neatly on one screen. They also allow for easy tweaks to the assumptions. That instantly generates a new budget, a new timeline.

For lack of a better word, the user can play with the assumptions, but only assumptions that are grounded in reality—not the wishful thinking of a CEO who has abruptly decreed that a key trial must finish in October 2013 in time for a major scientific conference in Madrid.

Embracing Efficiency

So clinical trials could be run in a businesslike manner, not simply lurch from one obstacle to another. “You can absolutely make clinical trials more efficient,” says ClearTrial principal Mike Soenen. “This company was founded on that premise. Our success speaks directly to that.”

Soenen is blunt about the cop-out, the excuse that clinical development is inherently too multifaceted to be run in a rigorous, punctual, economical manner. “Every industry has complex projects that change dynamically,” he says. “Many of them have followed much more disciplined planning techniques.”

One central aspect to his software, he says, is an easily visualized linkage between any set of assumptions and their financial and chronological cost. “We make it very clear and apparent that when you do this, here is the resulting impact on cost and time,” Soenen says.

Fresh Data

An earlier period of abundance has ended for pharma, he says. A new era of austerity has begun. Says Soenen: “We've been so fat and happy, living in such a world of plentiful money and a blockbuster bias that basically obviated us from having to be productive or efficient. Some were more quick to admit the new world they were living in. Others were less willing to admit that change had come.”

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A screenshot from ClearTrial's flagship application

And if personal genomics or biotechnology or some other breakthrough brings new FDA approvals, new medicines with plenty of patent life? Soenen thinks the new economic circumstances for clinically driven organizations are here to stay. “I believe this is a permanent shift,” he says. d9A2t49mkex

There are thousands of trials in his system. But Soenen says it’s not enough to just base clinical trial costs on static numbers. The industry’s practices change too frequently. So his software is more customer- and algorithmically-based. The client can add highly detailed information. If a particular indication has generally placed greater demands on clinical research associates, the ClearTrial software will allow for that.

No Forgiveness

Soenen is a bit concerned that so many companies in the life sciences are so comfortable with an ad lib, improvised approach to trials. A key person may leave a sponsor firm, he says, and leave her employer bereft of deep domain expertise in that compound or therapeutic area. “They are sitting there with no ability to cost out the clinical studies that they were imagining. That's what astounds me—the size of the companies that are running things in this way. You're flying without a net.”

In some cases, he says, senior level individuals who tolerate inaccurate costing projections may expose their organizations to compliance issues under Sarbanes-Oxley and other accounting rules. The reality of financial regulations is that the legal obligation to a supplier exists, and can be significant, even before the supplier's invoice arrives in the mail. ClearTrial's system handles all that.

Chief financial officers at small and mid-sized biotechnology firms must sign statements attesting to the accuracy of their financial filings and accrued liabilities. But spreadsheets aren't comprehensive enough to represent those liabilities accurately. The pinch is that some financial officers blithely accept wildly inaccurate program budgets or project accounting on instinct. Or faith.

Different Rules

Other companies, Soenen notes, have used his software to slash their permitted budget variances from 30 percent to five or even one percent. In effect, at such companies, there has been a cultural shift in how wrong key numbers are permitted to be.

Rather than helpless resignation in the face of the vagaries of patient recruitment, such sponsors learn that chronological and financial forecasts in recruitment can be as accurate as those for any other corporate activity.

The stakes may be even higher for formal alliances or acquisitions. Any serious analysis of a prospective deal that omits a detailed discussion of the future clinical spend, Soenen suggests, could be ill advised in a harshly skeptical investing environment.

Shrinking pipelines, the macro economic climate, pressure from generics are all intensifying just as the cash geysers from blockbuster drugs are drying up. “That stuff is all just clamping down on the business and making the forgiveness go away,” Soenen says. “There is no more tolerance. You have to have a handle on it. You have to know what things are going to cost.”

This is the third installment in a series. The first article examined sponsor-CRO relationships. The second article covered budgeting at Abbott.

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