Pharma Contract Management: Navigating Challenges In 2024

Content

• Why is pharmaceutical contract management significant?
• What are the standard contracts in the pharmaceutical industry?
• What are the challenges in pharmaceutical contract management?
• How to effectively manage contracts in the pharmaceutical industry?
• Contract Creation and Negotiation
• Contract Collaboration
• Contract Execution and Monitoring
• Contract Compliance 
• Performance Evaluation and Renewal
• Conclusion

Pharmaceutical companies require all kinds of contracts for their daily business operations. Whether quality agreements to set parameters, manufacturing agreements with CMOs, or R&D contracts for novel drugs, legal documents affect every facet of the pharmaceutical sector.

Given the strict regulations and intricate dynamics that bind the pharmaceutical industry, the entire contracting process needs to be in excellent shape to guarantee the intended results. Any carelessness in contract creation, negotiation, or administration can result in financial, legal, and reputational harm. Dock 365 offers extensive tools to instill efficiency and compliance in pharma contract management. Here’s all you need to know about it.

Why is Pharmaceutical Contract Management significant?

Contracts establish and maintain the rights and obligations of all parties involved in the pharmaceutical industry, including research, manufacturing, procurement, sales, and marketing. Any disparity in the contracting procedure may affect the company's capacity to introduce new products, find suppliers, or hire staff. That’s bound to reflect on their bottom line. 

1.  Ensuring compliance with regulations

The pharmaceutical industry is highly regulated, with strict guidelines and laws to ensure the safety and efficacy of drugs. Contract management allows pharma leaders to ensure compliance with these regulations. For instance, manufacturing units must uphold Good Manufacturing Practices (GMPs), Good Distribution Practices (GDPs), and other relevant guidelines. Pharmaceutical companies can impose mandatory regulations on manufacturers through contractual agreements, thereby preventing violations. Additional compliance guidelines pertinent to the pharmaceutical industry encompass health regulations, FDA standards, product quality, etc.

2. Maximizing revenue and reducing costs

Legal agreements govern every commercial transaction that pharma leaders engage in. They enable companies to negotiate better terms with suppliers, partners, and customers, ultimately driving profitability. An effective contracting process can help identify opportunities for cost savings, such as consolidating contracts or renegotiating terms with vendors. Pharmaceutical companies can enhance their profitability and attain sustainable growth by implementing contract management strategies that ensure compliance, mitigate risks, and establish performance standards.

3. Managing risks and protecting intellectual property

In the pharmaceutical industry, companies manage diverse risks, such as reputational, financial, and legal. A robust contract management process can go a long way toward identifying and mitigating potential risks before they escalate. They can add specific clauses and stipulations to address possible roadblocks in the sector. Additionally, it helps protect intellectual property by clearly defining ownership rights and confidential information in contracts. It is especially critical in the pharmaceutical industry, where innovation is central to growth.

What are the standard contracts in the Pharmaceutical Industry?

Contracts are essential for forming partnerships and guaranteeing the successful creation, production, and distribution of life-saving drugs. From research to outsourcing tasks to ensuring confidentiality, each type of contractual agreement serves a unique purpose in driving innovation and compliance within the industry. 

• R&D Contracts

Research and development contracts are the building blocks of innovation in the pharmaceutical industry. These agreements outline the terms and conditions of collaboration between pharmaceutical companies and research institutions to conduct studies, experiments, and trials for developing new drugs or improving existing ones. R&D contracts often cover intellectual property rights, data sharing, and funding arrangements for the partnership.

•  Manufacturing and Supply Contracts

Pharmaceutical companies often depend on Contract Manufacturing Organizations (CMOs) and Contract Development and Manufacturing Organizations (CDMOs) for drug development and production. Manufacturing contracts ensure the efficient and compliant production of pharmaceutical products. They establish the responsibilities of CMOs in manufacturing drugs according to regulatory standards and timelines. Supply contracts govern the distribution and delivery of finished products to various markets.

• Distribution Agreements

They are crucial for the smooth flow of pharmaceutical products from manufacturers to wholesalers, pharmacies, and patients. These contracts outline the terms of distribution, including pricing, delivery schedules, and compliance with regulatory requirements. Distribution agreements play a vital role in ensuring the timely availability of medications.

• Quality Agreements

Quality agreements outline the responsibilities of each party involved in the manufacturing, testing, and distributing of pharmaceutical products. These agreements are essential for ensuring that all parties comply with regulatory requirements, industry standards, and best practices to maintain the quality and safety of the products.

• Non-disclosure Agreements

Non-disclosure agreements are legal contracts that protect confidential information shared between parties. NDAs are helpful in the pharmaceutical industry when working with suppliers, research partners, contract research organizations (CROs), and other third parties. They help protect proprietary information, trade secrets, and intellectual property.

What are the challenges in Pharmaceutical Contract Management?

With the pandemic and rising health concerns, the pharmaceutical industry is under more pressure than ever before. They have to churn out high-quality products in no time without compromising industrial, organizational, and legal standards. Then, there’s the complexity of managing supply chains on a global scale to make timely commercial deliveries. 

Complex regulatory environment

As we have discussed, pharmaceutical companies must abide by various laws and guidelines, from drug development to marketing and sales. Contract management can be challenging as the legal documents should comply with these myriad of rules and regulations. Ensuring that pharma contracts meet these requirements while being flexible and adaptable can be daunting for contract managers.

Handling multiple stakeholders

Pharma contracts often involve multiple stakeholders, including pharmaceutical companies, healthcare providers, insurers, and regulatory bodies. Each of these stakeholders may have different priorities, goals, and requirements, making it challenging to ensure that all parties are satisfied with the terms of the contract. Establishing effective communication and collaboration throughout the contracting process to manage these diverse stakeholder relationships can be a cause for concern.

Data privacy and security concerns

In the pharma industry, contracts may involve sensitive and confidential information, such as patient data, intellectual property, and trade secrets. Protecting this data from unauthorized access or disclosure is a top priority for contract managers. However, ensuring data privacy and security while complying with relevant laws and regulations, such as GDPR and HIPAA, can require time and resources.

How to effectively manage contracts in the Pharmaceutical Industry?

Considering the demands and high standards of the pharma sector, traditional and manual contracting processes can no longer keep up with them. Companies must use the latest technology and tools to keep pace as businesses and contracts expand. They must digitally transform pharma contracts, leveraging AI and automation. Dock 365, an all-inclusive contract management platform built on Microsoft 365, enables enterprises to automate their contract lifecycle. Here’s how it can optimize pharma contract management:

Contract Creation and Negotiation

Using competent and consistent content across the organization is essential to successful contract authoring. Dock 365 allows users to use pre-written templates as the foundation for creating pharma contracts within minutes. Organizations can maintain these legally vetted templates and clause libraries for diverse purposes like confidentiality, quality, employment, etc. Rather than starting from zero every time to create an agreement, they only need to add the necessary fields and terms to these templates.

Negotiation with multiple stakeholders is a hectic process. The digital redlining feature within Dock 365 allows numerous parties to negotiate, collaborate, and comment on pharma contracts at the same time. The platform keeps track of all the changes with real-time version history. The stakeholders receive timely alerts for any alteration made to the legal document. Thus, everyone stays on the same page throughout the negotiation process.

Contract Collaboration

Multiple parties must collaborate in real-time to successfully carry out pharma contract management. Manual methods and disjointed systems can make it challenging for everyone to be on the same page throughout the contract lifecycle. Also, it makes businesses much more likely to lose track of tasks and agreements. Dock 365 offers automated workflows to manage these obstacles and maintain contracts on schedule. Businesses can route pharma contracts through reviews and approvals without hiccups. It enables internal and external stakeholders to collaborate effortlessly on contract-related tasks.

The fact that businesses in the pharmaceutical sector rely on diverse platforms to run their daily operations presents another challenge for contract management. It paves the way for information silos and duplicated activities. Dock 365 integrates easily with other ERP and CRM systems, allowing users to manage contracts from anywhere. There’s two-way data-sharing to ensure the integrity of business data. They can import customer or vendor information from Salesforce CRM, Business Central, Oracle NetSuite, or Dynamics CRM to create pharma contracts without manual data entry.

Contract Execution and Monitoring

A quick and painless signing process is the way to reduce turnaround time in pharma contracts. Thus, companies can onboard vendors, suppliers, researchers, manufacturers, and employees without delays or incidents. The conventional approach of getting physical signatures is no longer an option since most pharmaceutical organizations run globally with international stakeholders. Dock 365's platform includes electronic signature solutions such as DocuSign, Adobe Sign, and Sertifi, which streamline contract signing. They can automate workflows and reminders to route the agreement on time. 

Even after execution, businesses must stay on top of contracts to ensure compliance and performance. All parties must timely perform their responsibilities to avoid breaches and guarantee results. Dock 365 leverages AI contract management to let users extract pertinent clauses and set up obligation tracking so they can stay informed. Concerned stakeholders will receive reminders for payments, compliance, and responsibilities. 

Contract Compliance 

Compliance management is a must for pharmaceutical companies due to the numerous laws and standards they must adhere to. It helps protect the company's reputation while avoiding costly fines and penalties imposed by regulators. However, complex and expanding contract portfolios make it difficult for businesses to establish compliance. 

Dock 365, built on Microsoft 365, enables businesses to build a solid foundation to manage security, risk, and governance within industrial standards. Pharma can store all their contractual agreements within a centralized repository with advanced security features. There’s encryption and role-based access permission to prevent data leakage. Moreover, Microsoft's compliance capabilities for pharmaceuticals support global, regional, and industrial assessments, such as GDPR, CCPA, ISO 27701, ISO 27001, HIPAA, and FFIEC. 

Performance Evaluation and Renewal

A pharmaceutical contract has several aspects that parties must fulfill to meet performance requirements. From carrying out obligations to deliverables to payments, accurately evaluating performance against expectations enables businesses to achieve their actual contract value. Dock 365 provides advanced contract reporting and analytics capabilities to extract and retrieve actionable insights from contractual agreements. 

Pharma companies can create custom reports for performance, risks, value, and other contract management KPIs. They can make data-driven decisions while renewing or terminating agreements. Dock 365 allows users to set up automated reminders for renewals and other contract milestones. Thus, businesses have a fair warning in advance whether to continue with a contractual relationship.

Conclusion

Success in the pharmaceutical sector relies on efficient contract management. Companies must be precise in all contract-related tasks—from drafting to negotiating to signing to monitoring—to guarantee compliance and performance. Dock 365, an all-in-one contract management platform, allows pharma to do just that! It automates the entire contract lifecycle, reducing errors and turnaround time. 

Businesses can draft and execute diverse pharmaceutical contracts without hopping between platforms. The smooth integration of Dock 365 with Microsoft 365 and other business applications facilitates effortless collaboration on all systems. Companies can leverage Teams, Outlook, and SharePoint to manage contracts.

Check out Dock 365’s competitive pricing plans for businesses of all sizes and needs today!