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Outsourcing PV: Key Decision Drivers
Posted on November 2nd, 2016 by J.-P. Clement MD in Pharmacovigilance
The decision to outsource some or all pharmacovigilance (PV) activities to an external vendor is the most common but critical decision for PV activities. If a successful delegation to a reliable PV vendor can meet the company’s needs for pre- and post-approval, insufficient preparation of the transition can create long lasting suffering, and many compliance and quality issues. We will review here the drivers that can lead to a decision to outsource, and, in following postings, will talk about core competencies identification, the process for vendor selection and what are the critical success factors to consider to make it work.
Drivers for an outsourcing decision.
The main drivers for outsourcing PV activities are flexibility and costs. Companies of any size will face significant fluctuations of the case inflow in their lifetime, in particular when a new drug gets approved and launched. For a small biotech, outsourcing will be a great option to bypass the costs and efforts to establish a PV system, and get the right expertise and resources on board. In a larger company, obtaining additional headcount can look like a marathon with an uncertain outcome, and outsourcing will generally be the only realistic option. With PV becoming a strategic activity in the pharma world, hiring experienced PV resources has become more challenging in a very competitive environment; the geographic concentration of pharma activities (such as Boston or San Francisco in the US) reduces further the candidates’ pool. Beyond the time needed to hire, there is a learning curve to get new hires adjusted to the company’s specific PV system. In this environment, PV services vendors look very attractive. They maintain operations in lower cost environments (India, Eastern Europe, etc.). They can rebalance resources more easily than companies or maintain at hand a number of resources to absorb workload spikes. As they live and breathe PV as their core business, most of them possess a level of knowledge and expertise that makes them strategic partners for PV activities. However, there are several important points to keep in mind in relation to the costs. There is not a lot of publicly available information of the compared real costs between insourcing and outsourcing, so the actual savings are not easy to estimate. Furthermore, companies constantly and grossly underestimate the level of resources (and related costs) for the oversight of the vendor activities. In spite of this, outsourcing costs will always look better on a balance sheet than the associated costs of full time employees, and will be better looked upon by stockholders. Even if the real savings are uncertain, outsourcing PV activities will be the only viable or acceptable option for many, even if some large or small companies still prefer to use an insourced model.
Regarding quality and performance
Will outsourcing PV bring the expected level of quality and performance? It depends. The PV services outsourcing market is much more recent than the CRO market by decades, and even if there is now a plethora of PV vendors on the market, some are genuinely more experienced than others and will be more likely to satisfy the client’s expectations regarding performance and quality. In any case, as the idiom says, it takes two to tango. Each partnership is specific, some will be successful, some others absolutely not. There is a big learning curve to outsourcing, and some are better than others at that. There are success stories but also painful ones, and we will dive deeper on what can maximize the chances for a successful partnership later.
Insource or Outsource?
Most of the time, small companies have no other choice than outsourcing the basic PV activities (case income, processing, coding, etc.) since they need to transition quickly between a pre-approval to a post-approval focus. Large companies will do it for budget and headcount reduction/containment purposes. Some companies have opted for a hybrid model: for their legacy (older) products, the individual cases will be processed by an external vendor; for new products where the safety profile is not yet established and where the return on investment and risks are higher than for old products, all the PV activities are kept in-house. Of note, outsourcing does not always bring the expected results, and some companies have reversed course and transitioned back to an insourced global organization. It all goes by cycles…
In most of the cases, partnering with an experienced vendor and accessing its already trained resources will ensure quick immediate access to a platform of resources and expertise, and will respond to their immediate and long term needs. However, the road to there is often bumpy and can be treacherous…
In the following postings, we will review suggestions for a decision grid to utilize for selecting the core PV competencies that a company may select for outsourcing. This is one of the key factors for a successful outsourcing transition.
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J.-P. Clement MD
Executive Pharmacovigilance Consulting
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