Functional Service Provider (FSP)

Drug Development & Discovery – The Opportunity in Sharing Risk: A Productive Trend in Clinical Trials

Patient enrollment may be the single most important factor in ensuring the timely execution of clinical drug research. So when we negotiated risk-reward incentives for a trial evaluating a treatment for major depressive disorder, signing up participants accounted for most of the performance incentive structure: a significant double digit percent bonus (or penalty) tied to U.S. patient sign-ups and a little less for each of the other two countries in the trial.

Risk-sharing agreements between sponsors and contract research organizations (CROs) are becoming increasingly common, and it’s a constructive trend in an industry ruled by project deadlines and rising costs. These arrangements focus both parties early on the elements most important to ensuring a successful trial and motivate the CRO team to perform — and to remain intact in a business known for rapid staff turnover.

Having participated in a lot of these, we like to avoid the term “risk” in describing what are more accurately opportunity-sharing arrangements. Risk implies penalty, but in truth, the last thing sponsors would want is to exact fines when their research partners fail. These agreements instead should emphasize incentives for compliant or superior performance — payments the sponsors make gratefully as their projects proceed on or ahead of schedule.

Read more at Drug Development & Discovery.