Automated Contract Management Provides Substantial Benefits to Nektar Therapeutics

Challenging regulatory requirements and growing resource constraints place tremendous pressure on healthcare organizations. Automating labor-intensive, error-prone processes such as contract management can alleviate compliance risks and enable companies to gain productivity and reclaim valuable staff time.

Like most biopharmaceutical companies, Nektar Therapeutics deals with hundreds of complex supplier, partner and revenue contracts across its three locations in San Francisco, California, Huntsville, Alabama and Hyderabad, India. The company had previously relied on manual methods to manage contracts and associated obligations. For example, Excel spreadsheets were traditionally used to track expiration dates, milestones, and other pertinent information. Large revenue contracts were managed by the finance department, while business owners were responsible for managing their own contracts. In some instances, contracts were filed away in archived repositories, left unmanaged. In addition to being a time-consuming and inefficient process, it was extremely difficult to demonstrate compliance with governing policies and procedures.

In order to find a better solution, I was brought onboard by Nektar Theraputics’ new compliance attorney as the company’s first Contracts Manager. After assembling a team of contract management representatives from Nektar’s offices (Alabama and California USA), we set out to find a solution to streamline our contract management process.

Our primary goal was to find a system that would provide a single, common repository to house all contract information. The system had to be easily accessible to staff at each of our sites and allow for cross-company access and sharing of contract information. It also had to adhere to Sarbanes-Oxley compliance mandates.

Perhaps one of the biggest challenges in our search was finding a system tailor-made for the biopharmaceutical industry. The biopharmaceutical industry deals with a variety of contracts; therefore, a solution that targets one specific issue (such as intellectual property or sales- and marketing-related contracts) would not suffice. During our search we found that many contract management systems come standard (i.e. out of the box); while others allow only for minimal customization. We have a complicated workflow process; therefore, we required an industry-specific system that also could be easily tailored to meet our contracting standard operating procedures. An out-of-the-box solution or one with limited customization capabilities would not fulfill our contract management requirements.

After much due diligence, we deployed the Matrix Software System by CLM Matrix (Flower Mound, TX; www.clmmatrix.com) in 2009. Matrix provides us with fully automated contract lifecycle management capabilities from initial request and negotiation, to contract closure, with proactive monitoring of contractual obligations and automated workflow approvals and alerts along the way. Because it is built upon the Microsoft Office SharePoint Server technology platform, we were able to leverage our existing investment and our users did not have to learn a new technology as Matrix integrates into our existing SharePoint interface.

Sarbanes-Oxley factor

Since deploying the Matrix solution, we have greatly streamlined our contract management process. The volume of calls from other departments and offices requesting information has diminished significantly. No longer do we spend valuable time chasing down contracts. Contracts and contract metadata is available immediately to contract managers, Legal, Finance, and other key stakeholders with a few simple clicks of a button. Contract teams have immediate access to information, regardless of office location.

Additionally, compliance is quick and easy to demonstrate routinely, or upon request.

Sarbanes-Oxley was a key driver in our search for a contract management system. With an automated process in place, we can quickly and easily demonstrate to auditors that every contract that is initiated and executed went through the appropriate approval process and that the person(s) who signed off has responsibility for that financial obligation. We can effortlessly demonstrate that we are managing the contractual obligations for our revenue contracts as well.

Additionally, reporting processes have greatly improved. Previously, the development of quarterly reports for the finance department was a laborious, time-consuming process. Contract management representatives from each office were required to manually pull, scan, and then send contract data via e-mail. Now, because all the contracts are initiated through the Matrix System, information is captured and readily available for download regardless of the location of the contract. Rather than spending two to three weeks developing quarterly contract reports, we now spend less than two hours. It is a significant time savings and the information provided within the reports is much more detailed. No longer are we limited to quarterly reports. Individuals in our legal and finance departments can access contract information and pull reports at any time.

Previously contract business owners were responsible for managing expiration dates and contractual obligations. Utilizing the systems’ automated alert feature, we have eliminated the need for manual monitoring of contracts. For contracts that require advance notifications to avoid automatic renewal, we have the ability to set proactive notifications to warn contract stakeholders in 30, 60, 90 or however many days in advance. This information can be captured and pulled into reports as needed.

Proactive alerts can also be set to notify stakeholders when key milestones are coming up and when they have been met. Rather than monitoring milestones manually on an Excel spreadsheet, milestones are captured by the system and proactive notifications are sent to business owners. Notifications can also be set to alert stakeholders to upcoming deadlines.

The business intelligence gained from the system is company-wide. Whether processing a purchase order or verifying a contract is in place with a particular vendor, we have the ability to quickly initiate a search and determine whether or not the contract is in effect. No more waiting for the person who is requesting the services to find a contract and mulling through the details. This is a huge time savings for departments that span multiple offices and share contracts.

For example, it is not uncommon for researchers located in our Alabama, California, and India offices to use the same vendor for clinical research or pre-clinical research services. Prior to deploying the Matrix System, each office would set up its own contract, occasionally with the same vendor. Now, contract administrators in all three locations can quickly search and pull contract data from the system and prepare a statement of work for any new services offered through a vendor with an existing contract. This offers us an enormous time savings, making the entire contracting process more efficient.

The benefits associated with automating the contract management process are plenty. Our only regret is not having done it sooner.

ABOUT THE AUTHOR

Rebecca Cazares is Associate Director, Contracts Management, at Nektar Therapeutics (San Francisco; nektar.com), a clinical-stage biopharmaceutical company developing a pipeline of drug candidates that utilize its PEGylation and polymer conjugate technology platforms. Its product pipeline consists of drug candidates across a number of therapeutic areas, including oncology, pain, anti-infectives, anti-viral and immunology.