Philip Smith is senior director, Integrated Product Development at PAREXEL Consulting.

Philip Smith

The pharmaceutical industry’s return on investment (ROI), and the number of new products in its pipeline, has been decreasing for decades. To cut costs and increase efficiency, many pharma companies embraced outsourcing. Clinical operations, product formulation, and manufacturing were the first functions to be outsourced.

	But outsourcing of regulatory support has been perceived by many companies as an unacceptable risk; a failure to win marketing approval or maintain compliance for a product can cause significant harm (e.g., delayed or lost income, reduced market share, or reputational damage).

	If properly governed, however, regulatory outsourcing can result in improved compliance, greater transparency, higher productivity, increased cost-effectiveness, and desired strategic outcomes. And the risks have become manageable.

	Today, regulatory outsourcing is becoming more desirable for more companies, due to:

		Increasingly complex approval and post-approval requirements across the globe

		New global data and format requirements (identification of medicinal products [IDMP], electronic Common Technical Document [eCTD], etc.)

		Pressure for shorter development timelines from investors and other stakeholders

		Rapidly changing national, regional, and local guidelines and statutes that are difficult to monitor and respond to.

	Outsourcing, which offers a flexible workforce, can smooth uneven and unpredictable aspects of regulatory workloads characterized by periods of intense activity-such as clinical trial applications, marketing applications, and compliance crises-followed by relatively quiet times involving routine, but critical, maintenance filings. Smaller firms are challenged to maintain underutilized resources during slow times while larger firms that can afford to employ sufficient compliance teams are reluctant to do so as other investments, such as R&D or mergers and acquisitions, may have a better ROI.

	In a survey of regulatory executives from international pharmaceutical firms in five European Union countries, 91% said obtaining greater flexibility in human capital deployment was a key advantage of regulatory outsourcing (1). 

	Despite growing pains, regulatory outsourcing is a rational response to the increasingly constrained ROI model for drug development. Regulatory outsourcing partnerships can be refined and optimized by following three simple rules.

	Right-size regulatory outsourcing solutions

	A company must first define its needs. Does the company require improved efficiency, a re-focusing of responsibilities for key internal regulatory staff, additional expertise, global knowledge, and/or technology implementation?

	Once goals are clear, the organization should craft a collaboration that fits its deliverables and costs. Large transformational projects may demand a strategic partnership. Small, transactional projects may focus on compliance and cost savings. For example, a service provider may take over high-volume, high-frequency activities such as document preparation, dossier assembly, and submission publishing.

	Relationships can be right sized mid-stream. If a client acquires a portfolio from a third party and must establish affiliate relationships in multiple countries, an existing outsourcing partnership can be modified. A ‘virtual’ presence can be built in far-flung geographies where it does not make economic sense for the client to maintain a physical presence. A partnership should be adaptable to deliver cost-and-operational efficiencies to meet client needs.

	Regulatory outsourcing, even for small, targeted projects, is a change-management challenge. Staff may worry about the loss of responsibility, or loss of jobs. New processes and systems may be met with resistance. To overcome skepticism and fear, all relevant business units need to understand what the vendor is providing, with transparency for roles and responsibilities.

	The vendor can organize and conduct focused workshops designed to ensure that the client’s existing regulatory team understands and supports the outsourcing process. A shadowing process to introduce vendor teams to a company’s internal teams and to other stakeholders throughout the company can be used. The transfer of work can then be mapped. A rushed transition will likely be a troubled one. Transferring simple, downstream publishing activities to a service provider can take three to six months; a complete transfer of regulatory affairs portfolio management can take up to one year.

	Even if existing regulatory information management systems or processes are outdated or inefficient, few companies want to deal with a deluge of changes in addition to adopting an outsourced operating model. Many pharma companies prefer to retain their existing systems but will upgrade to more efficient technology if the benefits are explained and demonstrated rather than dictated.

	Ultimately, a successful outsourcing relationship requires support from top management. In successful large-scale strategic partnerships, appropriate motivation should be given to staff based on compliance and cooperation (quarterly goals, etc.). In this setting, governance and communications between providers and companies work best when function is matched to function, subject matter expert (SME) to SME, therapeutic area to therapeutic area, and local-regional experts to local-regional experts.

	A robust governance structure is vital to cultivating and maintaining a healthy outsourcing relationship. In addition to its operational skillset, the regulatory affairs team overseeing a service provider needs to have management expertise.

	The relationship’s success (or lack thereof) should be measured regularly. Key performance indicators of the outsourcing partner’s performance should include staff turnover and efficiency, price predictability, and overall client satisfaction.

	An effective outsourcing partner should report both strategic and functional metrics upon demand. Functional metrics should include percentage of on-time submissions, percentage of submissions achieving first time quality, and number of submissions completed versus number planned. Strategic metrics can be measured by a survey targeted to specific stakeholders, which can also elicit new ideas for improving the partnership.

	Done right, regulatory outsourcing adds value

	Regulatory outsourcing can add new technology, operational expertise, global and local regulatory intelligence, and process innovation to a company’s arsenal. Success requires bespoke solutions supported by management and nurtured by robust communication and strong governance.

Values and Disadvantages of Outsourcing the Regulatory Affairs Tasks in the Pharmaceutical Industry in EU Countries

Pharmaceutical Regulatory Affairs: Open Access 05.01

	When referring to this article, please cite it as B. Goldberg et al., “How to Get the Most from Regulatory Outsourcing," 

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Regulatory outsourcing can result in improved compliance, greater transparency, higher productivity, increased cost-effectiveness, and desired strategic outcomes.