Insource, Outsource, Or Both? Choosing The Right Model For Your Clinical Workforce

By Mark Shapiro, Pharma Initiatives

Technology alone can’t bring new therapies to market. Companies also rely on a highly skilled workforce to fuel their product pipelines. But as R&D activity accelerates and demands more of a tightening labor market, determining the optimal clinical workforce model or blend of models, whether outsourced or “insourced,” has become a formidable and high-stakes challenge.

What was once a mostly binary option to either outsource R&D or manage it internally has since broadened to incorporate multiple models sponsors can use to access specialized services, reduce costs, and drive efficiencies.

While traditional full-service outsourcing is still prevalent (and practically required for small or virtual biotech companies), and some organizations continue to maintain permanent in-house clinical teams, many others — especially midsize and larger organizations — are increasingly taking advantage of other models. In some cases, sponsors will carefully blend staffing models, striking a precise balance of capability and efficiency from one project to the next.

With so much riding on these workforce decisions, it’s important for biopharma sponsors to carefully consider — at the outset of a drug development project — what each staffing model offers and how these models can meet the demands of today’s R&D environment.

Today’s Common Models — Strengths And Weaknesses

For years now, the traditional employee model, which had long been preferable for key strategic positions in pharma and biotech, has been losing ground to other workforce models that better reflect the variable resource demands and flexible staffing needs of a modern R&D program. The need to be able to rapidly scale up and down in response to changing pipeline priorities means that in-house pharma roles have been replaced by CRO, contract, and consulting positions. With dynamic pipeline management, in- and out-licensing of assets during development, and fundraising pressures at pre-revenue biotech companies, CROs can provide the stability that pharma used to provide and some employee’s desire. This, along with other labor and industry pressures, has made it harder to find experienced operations leadership and highly skilled functional experts in search of, and available for, permanent in-house clinical teams.

Contractors and consultants, the other major “insourcing” model, solve many of the problems that make the employee model unnecessary or prohibitively difficult. Functional specialists can be brought in for the duration of a project, either to draw on their expertise to better oversee the functional vendors carrying out project work, or to do that work themselves. But the sheer scale of resources demanded by many studies still requires some form of outsourcing to scale up quickly and get the projects done.

Traditional full-service outsourcing, as mentioned before, is still an attractive and sometimes required path for study sponsors, especially those that can’t take on the functional or managerial tasks themselves. Despite its prevalence, full-service outsourcing’s advantages and disadvantages can be tough to parse and must be evaluated in the context of a specific study’s unique needs and constraints. No longer do large pharma companies reserve their in-house teams for their most critical projects. More often, they deploy scarce in-house personnel to smaller, complex, and early-stage projects and increasingly rely on CROs for large clinical trials.  Even among global Big Pharma companies, most project-level outsourcing follows the CRO’s processes, with some variability in the degree of systems sharing and Integration. Increasingly, large sponsors recognize that the CRO's processes require the CRO's systems, but sponsors still want to access their data, metrics, and reports in custom formats. Few small sponsors have fully developed processes for all aspects of trial execution, and it is rarely economical for them to deploy all e-clinical systems internally; however, it is still important for them to understand these tools and be able to specify requirements to the CRO.

The functional service provider (FSP) model emerged at the intersection of outsourcing and insourcing. Rather than handing an entire project over to a single CRO, sponsors — typically midsize or larger organizations with the ability to manage and oversee multiple vendors — can unlock new efficiencies by retaining some functions in-house and selectively outsourcing others. The advantages here are obvious, but the internal demands can be high. Managing multiple FSPs can make for complicated process handoffs and introduce a host of risks. Coordinating a complex clinical project across multiple function-specific vendors can create a massive management burden. When activities across a group of FSPs aren’t carefully orchestrated, sponsors can find themselves faced with an expensive post-study standardization project to format and harmonize the disparate work products.

Determining The Optimal Resourcing Model Or Mix

Parsing these models’ upsides and downsides at the outset of a clinical project isn’t always easy. There’s no playbook for clinical teams to follow, and the decisions are so case-specific, such a resource wouldn’t be all that helpful. Sponsors need to consider many factors, such as the type and volume of functional activities involved, protocol complexity, existing competencies, and site locations, to name just a few.

Of course, there are some widely recognized characteristics of outsourcing and insourcing that can help guide decisions at a high level. For example, it’s often acknowledged that the less tightly controlled a project needs to be — and the less that IP and speed are driving factors for success — the better the fit for outsourcing. Conversely, insourcing can be ideal for projects requiring greater relative control, a need to mitigate IP risks, and, in some cases, pressure to reach milestones and accomplish goals in shorter cycles.

Often, the bulk of contracted R&D services falls to non-core activities, while an internal team is built to manage high-value and highly sensitive functions. Determining the details of what work falls where often starts by evaluating the timeline goals and relative level of control required for each component of the project.

Since it’s impossible to establish universally applicable criteria for identifying the best workforce model for any given project, the following questions may at least be a useful starting point when weighing possible options at the outset of a study.

Full-Time Employees

• Would our long-term clinical program goals be helped or hindered by investing in permanent infrastructure?
• Do we foresee a need to scale our resources up and down or will our work volume be consistent?
• Would a permanent team enable us to retain the training and expertise required for future work?
• What risks are present in our current program, and would those best be addressed by developing and growing in-house expertise?
• Do our internal processes, systems, and SOPs offer the most benefit to a project compared to what a vendor can offer?

Contractors and Consultants

• If the project must be outsourced in some form, do contracted resources offer a way to acquire the functional expertise required to oversee that work without committing to permanent positions?
• Would contracted resources provide an opportunity to “trial” specialists who may be needed for future contract or permanent work positions?
• Do we foresee a need to scale internal resources up and down to flex with changing types or volumes of work?

Full-Service Outsourcing

• Would outsourcing this project work reduce the internal burden of task-specific management and coordination?
• Would this project benefit from integrating multiple services under one vendor?
• Is this a novel area that demands the specialized expertise and experience only a CRO can bring?
• Are we prepared to oversee and manage a vendor, and have the costs of vendor oversight and management been clearly identified and calculated?
• Are we prepared to efficiently manage a vendor contract to avoid threatening the project with administrative problems?

Functional Service Provision (FSP)

• Are there advantages to arranging our contract by unit or function?
• Is there an opportunity to save costs by volume discounting?
• Do we have enough functional oversight and management capability to make process handoffs efficient and de-risked?
• Have we implemented the standardization across systems and processes we would need to keep work products consistent from one vendor to the next?
• Based on the study’s progress, does it make sense to identify which functions are best left to vendors and which would benefit from being managed in-house, such as data management, safety, and quality?

While many elements factor into these decisions, one of the controlling ideas unpinning all of these questions is risk. Where are the risks in your clinical program that expertise can mitigate? Is it better to develop that expertise internally or access it externally? What kinds of expertise can and can’t you afford to lose? Although deciding on the optimal model is entirely dependent on the factors at hand, these questions can help frame the decision-making process, helping you determine an acceptable amount of risk and weighing the relative advantages and disadvantages of the options in front of you.

About the Author:

Mark Shapiro brings two decades of management consulting and hands-on operational leadership experience for clients in the pharmaceutical, CRO, and biotech business. His expertise is in growth strategies, business transformation, and operational excellence within clinical research and clinical development. He’s currently a partner with biopharmaceutical consulting firm Pharma Initiatives, where he focuses on growth and innovation strategies in clinical research, development, and medical affairs. Access his downloadable guide created in partnership with The FDA Group covering these and other clinical resourcing topics here. You can reach him via pharmainitiatives.com or connect with him on LinkedIn.