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Will SOX Crush Clinical Development?


By Chris Connor

May 12, 2006 | For more than the past decade, the struggle to achieve GxP regulatory compliance has forced life science companies to drastically alter their clinical operations and create well-defined standard operating procedures. The mandates specified in FDA 21 CFR Part 11 added further weight to the compliance burden, requiring data management groups to continually validate the technology used to create and manage the clinical data used in their submissions for marketing approval.

Today, for all practical purposes, GxP is well integrated into standard operating procedures and 21 CFR Part 11 compliance has become ubiquitous in the vast majority of vendor-supplied solutions. Life science companies have recognized the diminishing returns of developing their own bespoke applications to capture, manage, and submit their clinical data. And the result is a growing parade of companies turning to COTS (commercial off-the-shelf software) and technology subscription services to minimize their IT budget and regulatory exposure. But just as clinical operations and data management personnel were feeling as though they had tamed their compliance beasts of burden, many life science companies have noticed another elephant in the living room, and this one is wearing SOX.

In the latest Health Industry Insights Leading Indicators survey, when respondents were asked which compliance issues were driving their IT spending, GxP (GMP, GCP, and GLP) remained the top budget area for 2006 (see figure). Data Integrity and 21 CFR Part 11 compliance/data security rounded out the top three. However, over the past quarter, Sarbanes-Oxley nearly doubled, from 16 percent in Q4 2005 to 29 percent in Q1 2006.

Compliance Issues Driving IT Spending

The Other Elephant in the Room
The loss in revenue from drugs being withdrawn from the market, such as Merck’s Vioxx and Biogen’s Tysabri, forced pharmaceutical companies to seriously rethink drug safety. But as the initial wave of panic in the tent over lost revenue subsided, pharmaceutical companies replaced those fears with a growing concern over the unknown costs of the impending increase in regulatory scrutiny, and in particular the impact of corporate governance legislation such as Sarbanes-Oxley. It seems the walls erected to functionally divide organizations between regulated (clinical) and unregulated (everything else) may not function as well as life science companies had hoped.

Stockpile Bottled Water and Duct Tape?
The existing GxP-regulated clinical processes will remain largely untouched by legislation such as Sarbanes-Oxley. This is because these regulations are designed to reassure investors, who will gladly defer to the FDA on issues of clinical compliance. However, other functional areas such as investigator site management and payment processes, clinical operations functions considered unregulated in terms of GxP, will become fair game for financial auditors.

The CTMS Mighty Mouse
Just as the industry struggled with, but eventually succeeded in, bearing the burden of implementing processes that supported good clinical practices, as well as deploying technology that complied with 21 CFR Part 11, so too will it adapt to the transparency requirements of Sarbanes-Oxley. Look for clinical trial management systems (CTMSs) to play a critical role in enabling life science companies to comply with the financial disclosure provisions and corporate governance mandates of legislation such as Sarbanes-Oxley. If life science companies can build their CTMS muscle strength, Sarbanes-Oxley won’t crush clinical development, it will only make it stronger.

Chris Connor is life science senior research analyst at IDC Health Industry Insights. E-mail: cconnor@healthindustry-insights.com.

 

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