Articles
Risk Aversion as a Profitability-Limiting Factor in Clinical Trial Conduct
By Timothy Pratt, PhD
Originally published in PharmaVOICE, June 2005
Overcoming Risk Aversion
Clinical departments are inherently risk-averse. Clinical trials are the primary vehicle for drug and device manufacturers to bring their products to market. Indeed, for many, these trials are critical as drugs go off patent, devices become outmoded, and competitive pressure generally increases, since the trials are often the only way to bring forward a new, differentiated product. In many instances, that drug or device may make or break a small company or change the course of major corporations. Failure to attain clinical approval is, in these instances, a very unpleasant outcome, and any change that may be perceived as increasing that likelihood is seen as highly undesirable or "risky."
"Our definition of risk aversion then should consider the magnitude of the unpleasant thing that may possibly occur," Dr. Pratt says. "Common sense teaches us there is a direct proportional relationship between magnitude and avoidance.
The ultimate way to avoid risk is to do nothing - aversion. Marketers have often lamented this when dealing with their corporate regulatory departments. There's simply no upside for the gatekeeper to say "yes," and there is a potentially huge downside. So the answer, frustratingly, is often "no."
"In clinical trials, a similar phenomenon takes place, an avoiding risk is perceived as not disrupting the status quo - continuing to employ the same methodologies as the previous generation, no matter how inefficient - because the approvals have been forthcoming in the past; change is perceived to entail greater risk exposure to a possibly unpleasant outcome of great magnitude," he says. "No 'upside' is seen to risk-taking, and thus we have armies of CRAs, a plethora of monitors, and more administrative support than on can pole a stick at, all shuffling mounds of paper CRFs and attempting to clean up data that are inherently problematic as a result of the adynamic collection media: a non-interactive, non-error checking piece of paper. On top of that is a large layer of managers desperately trying to understand how their study/trial/registry is performing so as to mitigate the risk of study failure - and largely failing because of the six-to-eight week lag between data collection and review."
Risk aversion in clinical trials impacts the organization at the bottom line. High headcount overhead, lengthy data collection periods, and protracted data cleaning are but a few of the sequelae to risk aversion that diminish profitability. All these add up to significant financial resource expenditure and decreased cashflow/revenue as the organization waits for product approval. Senior managers have long looked at expensive clinical departments and tried to implement change. Unfortunately, most change agents are unfamiliar with the complexities of clinical research and are forced to rely on their knowledge workers within the departments for advice, and that advice is often not to change anything.
"As economic pressure mounts to improve corporate financial performance, whilst at the same time increase evidence through expanded clinical trials, senior management is looking hard at clinical departments again," Dr. Pratt says. "The tried and true methodologies will no longer suffice, especially in the face of multi-thousand patient outcome registries increasingly demanded by CMS for reimbursement: they simply cost too much. Benjamin Franklin once said 'the definition of insanity is doing the same thing over and over and expecting different results.' Dilberttesque anecdotes aside and Enron notwithstanding, few corporate leaders are insane, so some form of change is inevitable. But the question is what to change?"
