Understanding Key Early Phase Clinical Trial Cost Drivers

Pharmaceutical companies have been implementing intensive cost-saving efforts in the recent years through mergers, reducing overheads, and trimming down of entire business units for efficiency.¹ These efforts have increased the need to outsource services to external vendors throughout the R&D value chain. The early phase clinical trial market in 2014 saw an approximate outsourcing rate of 56 percent with most of the patient studies being externalized to both global and specialist CROs. As cost efficiency is the main focus for pharma, it is important to understand the cost behavior of outsourcing services. Introduction An important step in identifying the cost behavior of any outsourced category is to identify the cost drivers that determine the overall cost of the service. Once this is understood, strategies can be devised to reduce the biggest cost driver and also help in the negotiation process with the service provider. Let us now take a look into the key cost drivers for an outsourced early phase clinical trial service.   Author: Mathini Ilancheran