What Are Contract Research Organizations?

Definition & Examples of Contract Research Organizations

Researchers in a Contract Research Organization

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A Contract Research Organization, or CRO, is an organization hired by a company in the medical field to manage the company's clinical trials and perform other tasks to help bring a drug or device to the market.

Understand how Contract Research Organizations operate, the types of services they provide, and their pros and cons to assess their value as a business.

What Are Contract Research Organizations?

A CRO is an outsourcing company that a sponsoring company hires as an independent contractor to lead clinical trials and other research support services on its behalf. CROs typically contract with companies in the pharmaceutical, biotechnology, or medical device industries, but their clients also include governmental institutions, foundations, and universities. These organizations contract with CROs to acquire the specific expertise needed to carry out trials safely and efficiently without hiring permanent staff.

  • Acronym: CRO
  • Alternate name: Clinical Research Organization

How Contract Research Organizations Work

Given the complexity of drug and device development and the need to bring products to market rapidly to edge out the competition and meet patient needs, pharmaceutical companies are increasingly outsourcing critical functions including manufacturing and research. This has led to a surge in the hiring of CROs.

CROs play a key role in all aspects of the drug or device development process, from initial discovery to launch, but focus on Phase I–III clinical trials. Trials require a host of complex activities ranging from protocol design to preparation of materials for submission to the Food and Drug Administration (FDA). Rather than hire permanent employees with the specialized knowledge needed to perform these tasks in-house, trial sponsors such as pharmaceutical companies can outsource them to a CRO by formally transferring their responsibilities to the CRO in writing. The CRO, acting as an independent contractor with specialized knowledge, can perform a range of tasks on behalf of the sponsor to help bring new drugs or devices to the market faster, more efficiently, and at a lower cost.

A trial sponsor must transfer responsibilities to a CRO in writing. Moreover, the CRO is legally liable for the responsibilities it assumes, but the sponsor remains responsible for the integrity of the trial data.

For example, let's say that Pharma Co. wants to launch a new drug for diabetic nerve damage. It doesn't have the staff to design, develop, and test the drug in-house, so it sends a request for information to 10 CRO candidates and ultimately hires BioCorp. During the pre-clinical laboratory research phase, BioCorp aids in the chemical formulation of a compound that might work on patients with diabetic neuropathy.

When it's time for clinical trials, Pharma Co. assigns BioCorp the task of identifying and recruiting patients for the various trial phases and understanding how the body reacts to the drug and whether the drug produces side effects. During the data review and approval phase, BioCorp helps to analyze the patient data from the trials and prepare study reports to secure FDA approval for the drug. After the drug is approved and launched to the market, BioCorp continues to evaluate the safety and effectiveness of the drug on behalf of Pharma Co.

Types of Services at Contract Research Organizations

Services vary by the CRO, but typically include:

  • Biological and chemistry expertise
  • Formulation assistance
  • Project management
  • Database design and build
  • Data entry and validation
  • Clinical trial patient recruitment
  • Clinical trial data management
  • Medicine and disease coding
  • Quality and metric reporting
  • Statistical analysis plans and reports
  • Validation programming
  • Safety and efficacy summaries
  • Study report evaluation and submission
  • Marketing assistance

Some CROs provide comprehensive services in most or all of the above areas, and that too, for a wide variety of clients in the medical industry. In contrast, niche CROs specialize in specific areas or for certain types of clients. For example, a biometric CRO might choose to specialize in statistical analysis and data management for medical device companies.

Pros and Cons of Contract Research Organizations

CROs have their pluses and minuses:

  • Reduced need for staffing or infrastructure upgrades

  • Faster clinical trials

  • Lower costs without shrinking profits

  • Poor-quality work

  • Delays in commercialization

  • Potential for financial losses

Pros Explained

Contract Research Organizations should emphasize these positive qualities when advertising themselves to prospective hiring companies:

  • Reduced need for staffing or infrastructure upgrades: Contracting with an outside company means that the sponsor doesn't need to acquire the manpower, infrastructure, or office space to carry out drug or device design, development, and testing themselves. This characteristic is particularly beneficial for smaller firms who may otherwise find it difficult to recruit the specialized talent needed to bring a new product to the market.
  • Faster clinical trials: CRO trade groups claim that when firms or public entities outsource to a CRO, it reduces the time it takes to conduct a trial versus doing it in-house, translating to a faster time-to-market.
  • Lower costs without shrinking profits: As pharmaceutical and medical devices organizations face increasing pressure regarding high drug costs, they continue to seek ways to lower prescription drug costs without losing profits. Outsourcing clinical trial management to CROs is one way for these companies to significantly lower overhead costs, helping them recoup the money they might lose by reducing drug prices. Faster clinical trials can also help reduce costs.

Cons Explained

CROs have their downsides, namely:

  • Poor-quality work: Although being selective in the hiring of a CRO can guard against it, unsatisfactory work on the part of the CRO remains a risk for companies. A CRO could, for example, produce poor-quality data that necessitates repeat work.
  • Delays in commercialization: If a CRO misses a study milestone or has to redo work, the launch of the product might be delayed and result in the sponsor missing out on being the first firm to bring a product to market.
  • Potential for financial losses: Repeat work and delays can both result in lost time and money for the sponsor, which negates the benefit of choosing a CRO to begin with.

Sponsors often include a liability clause in contracts with CROs to alleviate the cost burden of repeat work by the CRO if the CRO does poor-quality work. As such, CROs should put in place robust quality-assurance protocols.

Key Takeaways

  • Contract Research Organizations are outsourcing firms hired by companies in the medical industry to perform tasks related to drug discovery, development, and testing, namely clinical trials.
  • Trial sponsors who want to transfer responsibilities to CROs must do so in writing, though this doesn't absolve the sponsor of the need to ensure quality data.
  • Services by CROs range from patient recruitment for clinical trials to data validation.
  • CROs reduce costs and speed up trials for sponsors but come with risks including poor-quality work and delayed product launches.