The Costs of Working with a CRO
Running clinical trials is an integral part of the pharmaceutical industry, crucial to the development and approval of new drugs and treatments. However, because these trials come with a significant financial burden, sponsor companies are constantly seeking ways to optimize their operations. Traditionally, they can go about this in one of two common approaches: acquire clinical trial services in-house or outsource the study either partially or fully to a contract research organization (CRO). CROs are external companies that provide contract-based support in the form of various trial services to the pharmaceutical, biotechnology, and medical device industries. These services range from clinical study design and data management to statistical analysis and regulatory support.
Efficiency is crucial when conducting clinical trials and CROs are valuable experts in their field that have consistently played a key role in the success of many studies. However, sponsors must also consider the costs associated with hiring such companies to partner with and whether they are more convenient than hiring support in-house. In this article, we delve into the factors influencing costs of working with a CRO, expenses associated with clinical trials, and whether CROs are more cost-effective than sponsors acquiring support themselves.
Increasing Demand for Contract Research Organization (CRO) Support
CROs are pivotal to the successful execution of clinical trials, offering a tailored resource of expertise, services, and logistical support that can significantly streamline the process for sponsors. According to a report by Grand View Research, the global CRO services market was valued at approximately US$50.55 billion in 2023 and is expected to grow at a compound annual growth rate (CAGR) of 7.0% from 2024 to 2030. In the last few decades alone, outsourcing clinical trials either in part or fully to a CRO has become increasingly common for the following key reasons:
- Expansion of R&D capabilities to multiple products and multi-phase development pipelines poses challenges with time and cost constraints
- Domestic costs of internal services are rising
- Globalization within the clinical research industry increasing the availability of international low-cost labor providers
- Greater emergence of smaller biopharma and biotech start-ups that often have not yet established a reputation
- Technological advancements improving efficiency in collecting and sharing data
Factors Influencing the Cost of CROs
Given their demand, hiring a CRO is typically accompanied with considerable costs. However, the exact total may be influenced by several factors, such as the size and phase of the trial, study design complexity, and the extent of services contracted by the trial company. Sponsors must also be cognizant of additional costs associated with more rigorous services such as data management and analysis, maintaining regulatory compliance, and providing individual site monitoring. Furthermore, some long-standing CROs like IQVIA and PPD employ a considerably larger number of employees than newer players like Vial. These organizations are more likely to possess broader geographical coverage worldwide, as well as offer a greater variety and depth in their service offerings. Lastly, the industry reputation and track record of the CRO in question can certainly influence how expensive their services are for those looking to partner with them. Based on these factors, and many more, the costs associated with hiring a CRO can vary significantly. Ultimately, study sponsors must thoroughly review and compare different CROs to find one that offers the best balance of expertise, value, and cost-effectiveness.
The Costs of Running a Clinical Trial
According to a report submitted by Sertkaya and colleagues to the United States Department of Health and Human Services, the average overall cost of conducting phase I, phase II, and phase III clinical trials is approximately $4 million, $13 million, and $20 million respectively [6]. For new drugs approved by the US Food and Drug Administration (FDA), pivotal phase 3 studies cost a median of $41,117 per patient. However, these costs will vary depending on several factors, such as the phase of the trial. For example, early-phase trials enroll a smaller number of patients, typically between 15 to 20, compared with phase 3 trials, which can require several hundred to several thousand participants.
Other factors influencing the costs of running a clinical trial include the required sample size, the geographical location of the trial, the number of clinical sites involved, the therapeutic area of the drug, the type of drug being assessed, and the specific tests and procedures required per protocol. The type of sponsorship must also be accounted for because academic institutions sponsoring clinical trials often have access to fewer financial resources compared with commercial sponsors, which typically have larger budgets for their drug development programs. Personnel salaries, site rentals, and equipment maintenance are other necessary expenses associated with clinical trials. Lastly, global trials will also require additional expenses for international site management, translation services, and regulatory consultants to ensure proper compliance in each participating country.
Comparing the Cost of CROs to Sourcing Services In-House
Although it may initially appear to be more cost-effective for sponsors to acquire clinical trials in-house, there are several factors which influence how these costs compare those of outsourcing to a CRO. For example, recruitment, training, and maintaining a well-trained team come with hidden costs which can add up quickly. Sponsors who choose to source these tasks on their own must also spend a significant portion of their time setting up the trial, from staff training and protocol development to completing regulatory submissions and managing data analysis. However, by outsourcing these out to a CRO, with its established infrastructure and expertise, sponsors not only free up valuable time to devote instead to developing their R&D efforts, but their clinical trial processes are also more streamlined. The following factors are also important to consider to determine which of these options is best for sponsors:
- CROs typically have lower internal overhead costs (e.g., legal, accounting, executive management, training, quality assurance, finance, and more)
- A larger number of resources and services requires more time to manage, especially if there are quality issues
- Filling open positions for in-house experts can take time, potentially delaying trial timelines
- Outsourcing offers established infrastructures from CROs with experience overcoming challenges common to clinical trials
While it may seem that enlisting the services of a CRO is more costly on an hourly basis, sponsors must conduct a comprehensive analysis that accounts for the above-mentioned factors and many more. Given the steadily growing popularity of outsourcing, hiring a CRO may end up being the more cost-effective solution in many case. However, this will depend heavily on the specific circumstances of the trial. Ultimately, conducting an informed review of these cost factors will ensure companies make the best decision for their clinical development and operational needs.
Vial: The CRO for Biotech, Powered by Technology
Our mission at Vial as a global next-generation, tech-first CRO is to empower scientists to discover groundbreaking scientific therapeutics that help people live happier, healthier lives. We have built a sponsor friendly, full-service CRO powered by technology that enables us to deliver flexibility, cost-effectiveness, and reliability. Contact a Vial representative today to discover how we can make a difference for your next clinical trial
