Biopharma Compliance Falls to CIOs

Pharmaceutical and biotechnology companies carry an unusually heavy regulatory burden. Not only are they challenged by increasing financial regulation from the Securities and Exchange Commission, such as Sarbanes Oxley, but these companies also face compliance with the industry-specific HIPAA (Health Insurance Portability and Accountability Act) regulations.

An additional industry pressure is on to meet evolving FDA (Food and Drug Administration) regulations. The recent controversy over post-marketing studies of Mercks arthritis treatment Vioxx, which stirred up worries over fully reporting clinical trial data, is an example in this arena. Electronic filing of clinical trial data to the FDA is also looming and will present another shift in regulatory procedure for such companies.

Managing these concerns via a relevant IT strategy is essential for biopharmaceutical companies. But it may be becoming a more elusive goal as regulatory demands mount and budgetary pressures grow.

Thats the finding of a new report from industry research group Life Science Insights, an IDC company.

Biopharmaceutical companies face increasingly tight margins, but they are still managing to consistently increase spending on regulatory compliance. Based on a survey of more than 100 biopharmaceuticals, Life Science Insights estimates that the average pharmaceutical company will bump up its spending on regulatory compliance from about $1 billion last year to $1.6 billion this year. Similarly, biotechs are expected to bump up spending from about $500 million to $800 million in 2005.

And the burden of managing compliance is increasingly falling to chief information officers, as the task becomes almost wholly reliant on adequate IT resources.

Already, more than half of life sciences research activity and IT is outsourced. CIOs face the challenge of pursuing further efficiencies along this path while needing to tightly manage the processes.

But “CIOs are being distracted from adopting technology by the internal environment,” analyst Dee Carri said. Budgetary pressures can make it difficult to acquire adequate IT resources to meet the growing cost and complexity of regulatory compliance.

Most biopharmaceuticals already have a series of technologies in place to meet compliance needs, including quality-assurance software as well as data and project management software. More than a quarter of the companies surveyed named electronic signature, document submission and workflow software as slated for new spending in the next year.

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