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4
Creating a New Business Model
for Clinical Trials
Costs of clinical trials have been rising in the United States (DeVol et
al., 2011). The workshop’s third session, “Aligning Cultural and Finan -
cial Incentives,” explored opportunities for developing a new business
model for clinical trials based on the seamless integration of technologi -
cal advances and research activities to realize increased efficiencies and
reduced costs. Individual speakers also proposed greater harmoniza-
tion of regulatory responsibilities and administrative processes. If such
changes take place on a large scale, clinical trials could become more
affordable and attractive to organizations, clinicians, and the public.
TRANSFORMING THE ECONOMICS OF CLINICAL TRIALS1
While the technology for gathering clinical data for research has
evolved over time, the business model supporting this technology
clearly has not evolved with each stage of technology transformation.
—Judith Kramer, Duke University Medical Center; and
Kevin Schulman, Duke University Medical Center
1 This section is based on the presentations and Discussion Paper by Judith Kramer,
Associate Professor of Medicine, Duke University Medical Center, and Executive Director,
Clinical Trials Transformation Initiative (CTTI), Duke Translational Medicine Institute; and
Kevin Schulman, Professor of Medicine, Duke University Medical Center, and Gregory
Mario and Jeremy Mario Professor of Business Administration, Fuqua School of Business.
(See Appendix F for the Discussion Paper “Transforming the Economics of Clinical Trials.”)
43
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44 ENVISIONING A TRANSFORMED CLINICAL TRIALS ENTERPRISE
Advances in IT combined with business model transformation
could combine to form a critical step in achieving transformation of the
CTE through lower cost, faster, and better data quality of clinical trials
according to a background paper prepared by Judith Kramer, Associate
Professor of Medicine, Duke University Medical Center, and Executive
Director, Clinical Trials Transformation Initiative (CTTI), Duke Trans -
lational Medicine Institute; and Kevin Schulman, Professor of Medi-
cine, Duke University Medical Center, and Gregory and Jeremy Mario
Professor of Business Administration, Fuqua School of Business. (See
“Transforming the Economics of Clinical Trials” in Appendix F.) The
entities involved in the conduct of clinical trials have not followed the
cost-reduction trajectory of other technology-intensive industries and
thus have not attained a business transformation sufficient to reap the
economic benefits of technologic change. Instead, rapidly rising costs of
U.S. clinical trials contribute to cost increases in developing innovative
health products. For example, the estimated cost of developing one new
drug has been suggested to range from $500 million to $2 billion (Adams
and Brantner, 2006). The resulting high cost of conducting clinical trials
constricts the pipeline for new drug development, limits the accretion of
knowledge about drugs that are produced, deters a focus on innovation
and improvements in trial design and conduct, and impedes the investi -
gation of important public health inquiries.
Increasing costs stem in part from obstacles that exist within regulatory
pathways or stem from administrative inefficiencies, including increas-
ingly complex clinical trial protocols, abundant requirements issued by
various levels of government and different governments and not harmo-
nized to ensure consistency, and excessively risk-averse interpretations of
regulations by trial sponsors. An example of the last is 100 percent source
documentation of all clinical trial data even though regulators—both FDA
and the European Medicines Agency (EMA)—do not require it. Some new
structures, such as CROs, have arisen to help trial sponsors operate in the
complex research environment. CROs are focused on efficiently conduct-
ing clinical trials according to current standards and client expectations
and do not have as their mandate a goal of advancing innovation in clini-
cal trial design and performance. According to some observers, CROs may
improve efficiency for trial sponsors, but their business practices may also
contribute to the current cost structure of clinical research.
According to the authors, new information technologies conceivably
could alter the conduct of clinical trials. For instance, electronic data
capture (EDC)—using a computerized system to gather clinical data in a
clinical trial—has the potential to reduce total costs, prevent errors, and
conserve the time expended by physicians, nurses, and data coordinators
by replacing multiple paper entries on patients’ clinical progress with
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45
CREATING A NEW BUSINESS MODEL FOR CLINICAL TRIALS
onsite, electronic entry. EHRs could also reduce recruitment and site-
screening costs and, furthermore, could enable direct-to-patient research,
limiting the involvement of physician intermediaries. Pfizer recently initi-
ated the nation’s first clinical trial, in support of an IND application, that
recruits participants over the Internet (Mansell, 2011). Smart phones are
another technology that can improve communication within research
programs and facilitate recruitment of participants in trials. However,
research entities continue to rely on legacy systems, such as freestanding
site-specific monitoring mechanisms and IRBs, rather than having these
functions centralized among all or most sites involved in the same trial.
So long as research organizations persist in overlaying the old business
model atop the new technologies, many potential efficiencies will not be
realized.
A broad approach to ensure the business model for clinical trials
keeps pace with technology and information needs and capabilities could
be based on a research agenda that examines how research is conducted
today. This research would point the way forward in terms of identifying
potential issues, and pathways, to reach business transformation of clini-
cal trials. The research agenda would be reassessed every 2 to 5 years to
ensure that business and regulatory mechanisms keep pace with techno-
logic advances and other changes in the economic, scientific, and health
care environment surrounding the CTE. Suggested pathways and oppor-
tunities for moving research business models forward would therefore
reflect findings that emanate from a forward-looking research agenda that
considers the seamless integration of technology into research. Also, har-
monization of regulations among multiple agencies, including different
levels of government in the United States and different countries (includ -
ing the European Union), could reduce the cost of monitoring trials.
Regulatory relief also could come in the form of the establishment of safe
harbors for business process innovation—to allow sponsors to follow
certain promising pathways before regulations have been developed and
finalized. Furthermore, enhanced clinical research education of health
professionals could equip practitioners to contribute to strategic efforts to
develop new ways to streamline clinical trials into clinical practice. Orga -
nizations that play a role in clinical research could reorient themselves
toward economic efficiency, shed “sunk costs” such as legacy systems
that no longer are needed, avoid overly cumbersome mechanisms for
applying regulatory controls, and embrace new information technologies.
Possible strategies mentioned during the presentation of the Discussion
Paper and discussion with the workshop audience for resolving economic
inefficiencies in clinical trials are summarized in Box 4-1.
Feasible new business models could emerge to replace the highly
labor-intensive and regulation-laden clinical trials system that predomi -
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46 ENVISIONING A TRANSFORMED CLINICAL TRIALS ENTERPRISE
BOX 4-1a
Selected Potential Strategies for Avoiding Unnecessary Costs
in Clinical Trials
The following actions suggested by Kramer and Schulman and individual work-
shop participants could facilitate the creation of new business models for clinical
research that integrate technologic advances:
• evelop a national research agenda, based partly on “research-on- esearch”
D r
findings, to guide business transformation based on the next generation of
technology;
• armonize regulations issued by different agencies and governments;
H
• ove away from excessively risk-averse interpretations of regulations by
M
r
esearch organizations;
• nhance clinical research education of health professionals, so they can help
E
design more efficient and meaningful research programs;
• pply new information technologies, such as web-based clinical trials and
A
smart phones, in place of outmoded mechanisms;
• se EDC and EHRs to apply clinical data to research, replacing paper-based
U
legacy systems;
• econsider costly regulatory controls, such as the Health Insurance Portability
R
and Accountability Act (HIPAA) regulations applied to clinical research, and
provide safe harbors for business process innovation;
• ngage in more strategic planning and consider new organizational structures
E
for entities conducting clinical trials; and
• ocus compliance monitoring and other oversight on areas of greatest risk, and
F
introduce expedited review and flexibility as appropriate.
a The information in this box is based on the presentations of Kramer and Schulman (2011)
and Discussion Paper by Judith Kramer, Associate Professor of Medicine, Duke University
Medical Center, and Executive Director, CTTI, Duke Translational Medicine Institute; and Kevin
Schulman, Professor of Medicine, Duke University Medical Center, and Gregory Mario and
Jeremy Mario Professor of Business Administration, Fuqua School of Business (see Appen-
dix F for the Discussion Paper “Transforming the Economics of Clinical Trials”); and discussions
with the workshop audience.
nates today. The adoption of new business models could be facilitated
by the engagement of all sectors in the conceptualization of business
transformation.2 The uptake of new clinical trial business models could
increase return on investment and introduce greater predictability and
efficiency as a consistent attribute of the CTE.
2 For example, currently, the CTTI, a collaboration between Duke University and FDA,
is undertaking to combine the perspectives of more than 50 stakeholder organizations to
develop new approaches and begin to point the way toward a new model for clinical trials.
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CREATING A NEW BUSINESS MODEL FOR CLINICAL TRIALS
IDENTIFYING OPPORTUNITIES TO IMPROVE
REGULATORY FRAMEWORKS FOR CLINICAL TRIALS3
Regulations are sometimes an excuse and
sometimes a huge, real issue.
—Kevin Schulman, Duke University Medical Center
Regulatory Harmonization
Paul Eisenberg, Senior Vice President, Global Regulatory Affairs and
Safety, Amgen Inc., discussed regulatory challenges from an industry per-
spective, focusing on the need for greater regulatory harmonization (see
also Chapter 5). According to Eisenberg, FDA’s IND application process
in the United States, while not particularly onerous in any single respect,
is overall more cumbersome than corresponding European or other for-
eign processes. A selection of problematic processes associated with U.S.
regulatory frameworks suggested by Eisenberg includes
• the use of form 1572 (which other nations actually discourage) for
clinical investigators;
• thorough and time-consuming FDA review of the formulation and
processes that led to the development of the clinical trial materials
used in a study under the IND process. By contrast, in Europe,
products developed in accordance with Good Manufacturing Prac-
tice (GMP) guidelines are deemed safe, and trial practices that meet
Good Clinical Practice (GCP) principles are deemed acceptable. In
some countries, a clinical trial can begin with a “clinical trial noti-
fication,” or a single IRB approval of the trial protocol;
• undeveloped regulatory framework for the co-development of
devices and drugs under the IND process in the United States. In
the past decade, an increasing number of pharmaceutical products
in development have come from large molecules that, by nature,
are more complex in their delivery mechanisms to patients. Thus,
large-molecule products in development might require syringes or
other devices to be developed simultaneously so that individuals
can benefit from these novel therapeutics;
• the evolving and somewhat confusing mechanism for reporting
adverse events experienced by clinical trial participants (including
immediate reporting of “serious” and unexpected events experi-
enced by participants);
3 This section is based on remarks made by Paul Eisenberg, Senior Vice President, Global
Regulatory Affairs and Safety, Amgen Inc., and the Discussion Paper “Developing a Clinical
Trials Infrastructure” (see Appendix G).
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48 ENVISIONING A TRANSFORMED CLINICAL TRIALS ENTERPRISE
• management of privacy protections under the HIPAA privacy reg-
ulations; and
• frequent, time-consuming inspections conducted by multiple regu-
latory authorities at research sites outside the United States.
The United States is not always a regulatory minefield. For example,
ethical review—the IRB process—actually tends to be more efficient in
the United States than in other countries. Nevertheless, as a consequence
of existing regulation-related challenges, Eisenberg said, pharmaceutical
research and manufacturing firms that would otherwise prefer to conduct
clinical trials at U.S. academic health and science centers may find them -
selves drawn instead to foreign venues for research.
Given the fact that research is conducted in many countries, oppor-
tunities for substantial collaboration and regulatory harmonization
exist. One is the potential for a standard international nomenclature—to
describe drug reactions, for example. Another opportunity that could
be explored is the establishment of a worldwide clinical trial database,
similar to ClinicalTrials.gov, but with broader participation from around
the world. Joint or coordinated inspections for GCP constitute a third
potential opportunity for international harmonization.
OPPORTUNITIES FOR ALIGNING CULTURAL AND
FINANCIAL INCENTIVES IN CLINICAL TRIALS
In a panel discussion, the session chair, panel presenters, Discussion
Paper co-authors, and audience members reacted to and built upon the
ideas contained in the Discussion Paper. Participants included session
chair, Arthur Rubenstein, Professor of Medicine, Division of Endocri -
nology, Raymond and Ruth Perelman School of Medicine, University
of Pennsylvania; Richard Rudick, Professor of Medicine and Hazel
Prior Hostetler Chair of Neurology, Cleveland Clinic Lerner College of
Medicine of Case Western Reserve University; Christopher Beardmore,
CEO, Translational Research Management; and Scott Steele, Director of
Research Alliances, University of Rochester. This section provides an
integrated summary of their remarks and should not be construed as
reflecting consensus or endorsement by the workshop participants, the
planning committee, the Forum, or the National Academies.
The health care system is adopting widespread transformative prac -
tices, such as moving toward employment of physicians by large health
care delivery systems (as opposed to individual physicians in private
practice), use of performance measures in determining reimbursement,
distance health monitoring, and other major changes. But, according to
several participants, transformation of the CTE and of the health care
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CREATING A NEW BUSINESS MODEL FOR CLINICAL TRIALS
system are proceeding on different tracks, even within institutions, such
as AHSSs.
Cultural and Other Barriers
Workshop participants mentioned several possible cultural, eco-
nomic, and regulatory barriers impeding transformation of the CTE into
new business models. It was suggested by one workshop participant
that older researchers are often less comfortable with new information
technologies than younger researchers, which might hinder their involve-
ment in the latest clinical trials. Another barrier is that regulatory and
legal concerns make some people fearful of attempting innovations that
could create liability problems for their institution. Some workshop par-
ticipants noted that the public is not highly informed about science and
research, and that there may be a casual attitude that is shared by political
leaders and even clinical practitioners. In the current health care system,
academic medicine is largely separate from community practice, and
community practitioners may not view their job function as involving
research. Rudick noted that clinical research and clinical investigators
cannot function, let alone thrive, when they operate separately from the
health care system. He stressed the need to integrate clinical trials, and
more broadly clinical research, into the U.S. health care system in order
to realize a truly transformed CTE.
It was noted that although the pluralistic U.S. health care system
has several advantages over a monolithic system, such as avoiding some
wasteful expenditures for large systems before they are piloted on a small
scale, the fragmentation makes it difficult to achieve change quickly and
universally. Cultural change also could be spurred by new regulatory
approaches. For example, it was noted that establishment of an opt-out
mechanism, where people are presumed to approve use of their patient
records for research purposes unless they specify otherwise, could facili -
tate the secondary use of patient data for research purposes and promote
the expectation of public participation in research.
Reimbursement and Economic Incentives
It is of signal importance for third-party payers to cover the costs of
participation in clinical trials. Patients in trials can incur costs greater than
patients in routine health care. Also, rational budgeting of clinical trials
by sponsors is impossible without knowing which expenses are research
administrative costs, to be paid by sponsors, and which are routine care
costs, which may be required to be paid by insurers or patients. Some
states already require payers to cover the routine medical care costs of
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50 ENVISIONING A TRANSFORMED CLINICAL TRIALS ENTERPRISE
patient participation in clinical trials. Section 10103(c) of the Patient Pro -
tection and Affordable Care Act requires coverage of routine patient care
costs associated with clinical trials, with no discrimination against clinical
trial participants, by the beginning of 2014.
An additional dimension of the reimbursement landscape is the frag -
mented nature of the U.S. health care system, including the existence of
many payers. This fragmentation makes it difficult both to clarify which
payer is responsible for covering the costs of a clinical trial and to have
consistent and universal transformation of the business models for clinical
trials. However, one participant noted that, because each payer makes its
own coverage and payment decisions, an opportunity exists for providers
to develop an innovative payment approach through negotiation with
an individual payer (akin to a payer-specific demonstration program).
Beardmore noted the feeling of some community oncologists that they
are marginalized in discussions of cancer care policy and reimbursement
reform despite the expectation that they will enthusiastically support and
implement the programs and policies being developed (Kolodziej, 2011).
He also noted that with respect to reimbursement, many large payers
are moving toward value-based insurance design, in which payers link
reimbursement levels to evidence on health outcomes to reduce waste
(IOM, 2007; Kapowich, 2010). One workshop participant suggested that
this move indicates that cultural change about the value of research and
evidence could ideally be partnered with a change in payment systems
to demand (or “pull,” as opposed to “push”) more knowledge about
treatments.
In addition to adequate compensation for patients and healthy vol-
unteers participating in research, Eisenberg noted that insufficient com-
pensation for clinical investigators is a problem that contributes to low
levels of participation in and leadership of trials in the United States.
Rudick also noted that there currently is no effective financing mechanism
in place for clinical investigators in academic medicine, resulting in an
unstable and unattractive career path.
Informatics
EDC, directed by a neutral entity operating via a system of cloud com-
puting, can connect individual systems used by health care systems and
research organizations. This interoperable approach could obviate the need
for one unified data system. Alternatively, a central data repository could be
established, with universally retrievable information about the capacity of
research sites, the credentials of investigators, protection of human subjects,
training, and other topics, thereby eliminating the need for the laborious
and wasteful gathering of information to support each new trial.
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CREATING A NEW BUSINESS MODEL FOR CLINICAL TRIALS
Many informatics products now are legacy-driven. An AHSS that
has invested in separate systems for billing and research does not have
incentives to replace both systems with a new, integrated product. Dif -
ferent academic institutions have their own systems, and little interoper-
ability exists. While federal regulators, health care providers, and the IT
industry focus primarily on the “meaningful use”4 of EHRs, according to
a workshop participant they are not sufficiently investing in connectivity
and the use of EHRs in the health care setting for clinical trials. Conse -
quently, the records of patients who receive care from different providers,
health systems, or academic institutions are all incomplete. It was sug -
gested by one workshop participant to start increasing efficiency and
interoperability by merging information for compliance systems such as
financial disclosure forms. Billing, scheduling, and other processes also
could be combined.
International Competition
Many participants noted that the United States will have to invest
more heavily to remain competitive in the field of clinical research and to
achieve more effective and value-driven health care. While other countries
are increasing their commitment to medical research, in recent decades
U.S. health policy concerns have been concentrated on cost containment.
Clinical research has not been central to the discussion, even though
research could lead to a significant reduction in expenditures for medically
unnecessary procedures, which contribute to an estimated $750 billion to
$765 billion of excess in annual U.S. health expenditures (IOM, 2010b).
Workshop participants expressed differing views about the best way
to meet the challenge of globalization in clinical trials. One view was
that it may make sense to let other countries undertake industry-driven
studies, of the type regulated by FDA, while the United States moves
into quality improvement and clinical effectiveness research as an area of
growth. A contrasting view was that, to the extent clinical trials are mov -
ing offshore due to excessive U.S. research costs, this is a loss to the United
States. In this view, research should be conducted in the United States
if the results are to be applied to U.S. populations specifically. Another
4 The HITECH Act, part of the American Recovery and Reinvestment Act of 2009, allowed
CMS to provide financial incentives to health providers for the adoption and “meaningful use”
of certified EHR technology. Meaningful use entails three components: (1) the use of certified
EHR technology in a meaningful manner, such as e-prescribing; (2) the use of certified EHR
technology for electronic exchange of health information to improve quality of health care;
and (3) the use of certified EHR technology to submit clinical quality and other measures. For
more information, visit https://www.cms.gov/EHRIncentivePrograms/30_Meaningful_Use.
asp (accessed March 28, 2012).
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52 ENVISIONING A TRANSFORMED CLINICAL TRIALS ENTERPRISE
type of viewpoint offered at the workshop identified spillover benefits
to conducting clinical trials in the United States. Trials are educational
opportunities because knowledge of, or participation in, clinical trials
facilitates dialogue among clinicians about developing medical evidence
for new treatments or comparing products or interventions already in use.
Clinical trials are also a source of jobs. And finally, clinical trials can result
in improved clinical care for trial participants.
Building Consortia to Create Conditions for Change
When the U.S. semiconductor industry faced strong pressure from
Japanese competition and other forces, a Semiconductor Manufacturing
Technology consortium (SEMATECH) was formed to create elements of a
single manufacturing infrastructure, supported with the pooling of funds
and public–private partnerships. The consortium concept may be appli -
cable to the challenges facing the CTE, according to Steele. The creation of
consortia could enhance the current clinical trials infrastructure. Already
the Biomarkers Consortium, managed by the Foundation for the NIH
(FNIH), is developing common adaptive trial designs. The CTSAs and
academic medical centers share training programs, improve common
understanding about regulatory requirements, improve informatics,
develop model clinical trial agreements, and achieve other infrastructure
enhancements across the CTSA institutions. The consortia model also
could help overcome cultural barriers to CTE transformation, by resolving
problems in leadership and governance. For example, Steele suggested
that a consortium could be developed to revamp the weighty IRB struc-
ture as currently used in clinical research. Interagency coordination also
can be improved through coordinating councils with multiagency input.
